Weekly Review 9-27-14

This week I started to realize how bad was my grain holdings after I finished to quantify my bull/bear ratio. My bullish positions are more than 100% more than my bearish positions in wheat and soybean options. The only thing I did right was not getting into bull puts with corn but bear positions. There are several reasons that I could think of and learn from. 1, my losses in corn was the smaller one when the down turn started in May. Therefore my gambler's emotion and the urge of win back were not as strong as the others. 2. I realized corn's downtrend earlier through gathering market information. There are more market data and comments in corn since it's the largest corp in the US. As for wheat and soybean losses, first, I was overwhelmed with gambler's win back right the way emotions. Second, I was overly concerned about keeping cash balance at certain level. Thirdly I was overconfidence of expecting resistance levels to hold based on my barely one year experience in grain trading. After looking at seasonal studies, especially the historical charts last week I realized how low the prices could go down. It's scare. I decided to get out of these positions and wait in the sideline. I also plan to add more puts positions to hedge my losses. My steps are still too small as my habit of waiting and hoping for any bounce to save few bucks. I got very frustrated as the price actions have not given any relief for weeks. I must implement my plan aggressively next week as more downward movement likely to happen with harvesting continues. I will buy back my as many underwater positions as my margin allows. Shut first, as it later.

Equities moved into volatile stage last week. Bears and bulls have engaged a tag war so far and no clear winners yet. I started to trade SPX credit spread instead of ES due to my margin limit, better % of ROI and limited risk. Of course my commissions would be slightly higher. I also plan to make my credit spreads into Iron Condo when and if the market allows. My rules of engagement and stop loss principles will remain the same. I have traded in small size (3-5 cars) so far. I need to study and observe more of this particular contract. It may be somewhat similar and different from ES.

My next week's goals are still to recognize my emotions and thinking process during my trading, pay more attentions to my subconscious especially when it's not agree with my trading decision. I have been more patience last week. I waited for VIX to come to me even though I didn't get any fill. I withheld my urges to get out some grains puts for smaller profit with fear of losing it. I realized that my objective is to hedge my bull puts and I waited.