Trader456's trading ideas - page 9
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Sharing my experience when I was a commodity specialist
When I was a commodities specialist in a bank, a lot of my friends thought that most of my customers had bought commodities to tap on the commodity supercycle.
Actually that is not true; more than 70% of the customers then were hedgers and only 30% were speculators.
This is the same reason why our commodity desk was very profitable then.
Why?
If the customer is a speculator, most likely he is trading 1 - 5 lots of copper. The customer knows that trading futures is risky, so he is trading within his means. While for a corporate in a manufacturing or physical trading business, the customer will be trading 40 - 100 lots of copper to hedge his physical positions.
In addition, since futures trading is a speculative activity, over time the losers will be gone and only the winners stay. So this speculative group of customers will become smaller over time. But in hedging, the same customers will come again, because as long as their business is running, they will need to hedge for risk management purposes. As good words spread of this team, most hedgers will come in.
The knowledge of hedging and risk management was very crucial in my job then. Here is a common senario from a corporate customer (hedger):
The customer called me and told me that:
He had bought 2000 metric tons of copper from his supplier based on September average price, delivery in early October.
At the same time, he had already sold 500 metric tons at $7300 to a customer, delivery in mid October. If price rises higher in mid October, he does not want to miss the opportunity on the price appreciation.
He asked me what should he do to hedge his risk.
i) Current price of copper was trading $7000
ii) September average price is unknown, we will only know the price at the close of September trading day (30th September).
iii) Contract size for 1 lot of LME Copper is 25 metric tons of copper (LME represents London Metal Exchange)
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My answer to my customer would be:
a) Since he had bought 2000 mt of copper from his supplier based on September average price, he should short the same amount of contract size in the futures market. This would mean short 2000 / 25 = 80 lots of copper futures.
By 1 October, the customer will have a short position on 80 lots of copper futures at September average price. At the same time the customer had fixed the cost of his physical copper at September average price. So this physical trade is hedged.
b) The customer also mentioned that he had sold 500 metric tons at $7300 to a customer. To hedge his risk, he should buy copper futures at market rate based on the same contract size, which is 500 / 25 = 20 lots of copper futures.
In the event that copper price raises to $7700 by mid October which is the delivery date, he should have profited 7700 - 7000 = 700 x 25 = US$17,500 from the futures market.
At the same time he lost the opportunity to sell his phyical good at higher price of 7700, opportunity loss is 7700 - 7300 = 400 x 25 = US$10,000. So this physical trade is hedged as well.
Rising commodities price can reduce profit margin of your business. Hedging is a strategy designed to minimize exposure to an unwanted business risk.
If your business requires hedging, send an email to me at metal.commodity@gmail.com. I will be glad to recommend a commodity broker who is an expert in hedging.
If you aspire to become a commodity specialist, try to get some commodities trading experience by trading mini contracts. Commodities trading is available at IG Markets, click here to open. Demo account is available.
Canada Dollar Declines as Crude Oil Drops Canada's currency fell after crude oil dropped to a five-month low and the U.S. dollar rose against other major currencies. The Canadian dollar traded at C$1.0689 against its U.S. counterpart at 10:38 a.m., down 0.2 percent from yesterday's C$1.0667. Crude oil for October delivery touched $105.46 a barrel on the New York Mercantile Exchange, the lowest since April 4, as Hurricane Gustav spared U.S. Gulf states the destruction caused by Katrina and Rita in 2005. Commodities, including oil, account for about half of Canada's export revenue. The Bank of Canada meets tomorrow on interest rates. Lower crude price is one of the things causing weakness in the Canadian dollar. My trading system signals BUY for USDCAD. Bought 10,000 USDCAD at 1.0714Stop level at 1.0610Target level at 1.0908 Chart: Forex & Binary Trading: Canada Dollar Declines as Crude Oil Drops
On 5 September I had shorted 10,000 USDCAD at 1.0654, stop level at 1.0785, target level at 1.0487. Details here.
USDCAD had moved in my favour to 1.0571, profit is up 83 pips, US$77.62.
Non-farm payrolls fell by -84k last month, driving the unemployment rate to a 5 yeer high of 6.1 percent. This signals that US economy is getting very near to recession stage. Weak US economic data may weaken USD temporary.
My system is still signal SELL for USDCAD.
I had removed my stop level at 1.0785 and set a 30 pips trailing stop instead.
Trailing stop ensures that some profit is secured in this trade. With trailing stop, my stop-loss order is adjusted continually based on fluctuations in the market price, always maintaining 30 pips above the market price.
hart: https://www.mql5.com/go?link=http://www.forexandbinary.com/2008/09/usdcads-trade-profit-up-83-pips.html
Support level at 1.0550 creates a rebound for USDCAD, not taking any chance I decide to take profit first.
Bought back USDCAD at 1.0570, profit is 84 pips.
Anyone who is interested in my trading system, send an email to me at metal.commodity@gmail.com.
Yesterday I had shorted 20,000 USDJPY at 108.43, stop level at 110.00, target level at 106.94. See here.
USDJPY moves in my view, trading at 107.45 now, profit is up 92 pips, US$168.24.
My trading system is still signal SELL for USDJPY.
On Monday 8 September, I had shorted 20,000 USDJPY at 108.43, stop level at 110.00, target level at 106.94. See here.
The yen traded near a one-year high against the euro on speculation credit-market losses will spread, prompting investors to reduce holdings of higher-yielding assets funded with Japan's currency. Rising yen pushes USDJPY cross downwards.
USDJPY went below 106.94, reached my target level, so position is closed. Profit is 143 pips, US$264.44.
Chart: Forex & Binary Trading: USDJPY's profit up 143 pips (Closed)
GBPJPY Should Fall Lower
U.K. economy is weak, I think GBP has to fall further, here are the reasons why:
Housing prices have been falling. They had slided 9 percent this year alone. That is the worst drop in 15 years. Central Bank chief Mervyn King says it has further to go.
Falling house prices and higher food and energy costs are going to dampen consumer spending even more in the coming months.
The British have taken on a record 1.4 trillion pounds ($2.8 trillion) in debt. And those borrowing costs arent getting any cheaper.
Bank of England policy maker David Blanchflower said job losses will triple as the economy slows.
So we should see British pound going lower.
My system has signaled SELL on GBPJPY.
Shorted 10,000 GBPJPY at 186.18
Stop level at 188.26
Target level at 183.31
Chart: https://www.mql5.com/go?link=http://www.forexandbinary.com/2008/09/gbpjpy-should-fall-lower.html
Buying Opportunity for USDCAD
US Dollar weaken is overdone, this weaken should stablise temporary. Good support at 1.0420 on the hourly chart, I predict USDCAD will rebound from there.
My trading system has signal BUY for USDCAD.
Bought 30,000 USDCAD at 1.0464
Stop level at 1.0400
Target level at 1.0542
System Signals BUY for USDJPY
In my previous article "USDJPY is a Good Barometer of the Stock Market", I mentioned that my system is starting to signal BUY for USDJPY.
Usually when my system gives a signal, I look use hourly chart to determine my entry level.
Hourly chart shows that USDJPY is oversold, so I took the opportunity to buy USDJPY.
Bought 30,000 USDJPY at 106.56
Stop level at 105.40
Target level at 107.90
See here: https://www.mql5.com/go?link=http://www.forexandbinary.com/
77% Success Rate from BL Trading System
Current banking crisis environment is certainly too risky for equities investment. Investors should look to alternative investment to grow their money, forex trading is one of them.
After years of building systems, testings, modifications, and more testings, I had finally created a forex trading system that had helped me to achieve more than 70% success rate in forex trading.
The theory behind the system is that, there is a rotational, repeating cycle in the movement of the market prices. This is much like that of the waves of the ocean, where the waves react in relation to the invisible undercurrents of the ocean. These cycles keep repeating itself again and again with a time frame of not longer than 2 months for each cycle (from experience).
The reason that such a phenomenon happens and repeats itself is due to the nature of human behaviour. All through time, people have basically acted and reacted the same way in the market as a result of: Greed, Fear, Ignorance, and Hope. Markets can change, but human nature has stayed the same for centuries.
Below are trades executed based on my trading system:
22 trades in total: 17 winning trades and 5 losing trades
1. On 2 October 2008 I had bought 20,000 USDJPY at 105.41, stop level at 104.39, target level at 106.89. USDJPY moves up after job data is announced. I decided to take profit at 105.69 as there seems to be some resistance at 106.00. Profit is 28 pips, US$55.39.
2. On 29 September, I had bought 20,000 USDJPY at 104.96, stop level at 103.30, target level at 106.76. U.S. stocks rose as growing expectations that lawmakers will salvage a $700 billion bank- rescue package helped the Standard & Poor's 500 Index recover more than a third of yesterday's 8.8 percent plunge.
This news has helped to push USDJPY up. I took the opportunity to sell USDJPY at 105.90, profit is 94 pips, US$179.93.
3. On 23 September I had shorted 20,000 NZDUSD 0.6844, stop level at 0.7000, target level at 0.6648. NZDUSD has fallen too sharp and too fast, I decided to take profit first at 0.6780. Profit is 64 pips, US$128.00.
4. On 23 September I had bought 20,000 USDCAD at 1.0363, stop level at 1.0259, target level at 1.0490. USDCAD has rebounded too fast and too sharp so I took profit first at 1.0423. Profit is 60 pips, US$117.13.
5. On 23 September I had bought 10,000 USDJPY again at 106.24, stop level at 104.50, target level at 107.75. Seeing that USDJPY has difficulty break 107.00 resistance, I decided to take profit first at 106.64. Profit is 40 pips, US$43.51.
6. On 23 September I had bought 20,000 USDJPY at 105.75, stop level at 104.78, target level at 107.78. USDJPY fell after hourly stochastics shows oversold, I decide to take profit first. Sold at 105.94, 14 pips profit, US$26.44.
7. On 23 September Asia morning hours I had bought 30,000 USDCHF at 1.0776, stop level at 1.0668, target level at 1.0918. I decide to take profit early at 1.0839, profit is 63 pips, US$174.37.
8. On 19 September I had bought 40,000 USDCAD at 1.0622, stop level at 1.0518, target level at 1.0772. USDCAD fell below 1.0518, so my trade is stopped out. Loss is 104 pips.
9. On 16 September I had shorted 20,000 USDCAD at 1.0721, stop level at 1.0826, target level at 1.0590. USDCAD rises above resistance level of 1.0747, decide to cut loss to reduce the damage. Loss 63 pips, US$121.13.
10. On 16 September I had shorted 20,000 USDJPY at 106.32, stop level at 108.10, target level at 104.69. USDJPY fell below 104.69, so position is closed. Profit is 163 pips, US$311.40.
11. On 12 September I had shorted 20,000 USDJPY at 107.40, stop level at 108.50, target level at 106.10. In the early Asia hours of 15 September, target level of 106.10 was reached, so my position was closed with 130 pips profit, US$236.06.
12. On 10 September I had shorted 10,000 GBPJPY at 186.18, stop level at 188.26, target level at 183.31. GBPJPY rises above 188.26, so my stop is triggered.
13. On 8 September I had shorted 20,000 USDJPY at 108.43, stop level at 110.00, target level at 106.94. USDJPY went below 106.94, reached my target level, so position is closed. Profit is 143 pips, US$264.44.
14. On 5 September I had shorted 10,000 USDCAD at 1.0654, target level at 1.0487. Details here. Support level at 1.0550 creates a rebound for USDCAD, not taking any chance I decide to take profit first. Bought back USDCAD at 1.0570, profit is up 84 pips, US$78.57.
15. On 3 September I had shorted 10,000 USDCHF at 1.1078, stop level at 1.1182, target level at 1.0932. USDCHF rise above 1.1182, so my stop triggered. Loss amount is US$104.
16. On 4 September I had shorted 10,000 USDJPY at 108.18, stop level at 109.30, target level at 106.91. USDJPY slided down, I decide to take profit first as tomorrow US is going to announce Non-Farm Payroll. Bought back at 107.43, profit is 75 pips, US$69.81.
17. On 2 September I had shorted 10,000 USDJPY at 108.82, stop level at 109.85, target level at 106.85. The whole forex environment turns 360% today, decided to take profit on USDJPY first. Bought back at 108.40, profit is up 42 pips, US$35.75.
18. On 29 August I had shorted 10,000 EURGBP at 0.8105, stop level at 0.8208, target level at 0.7909. EURGBP keeps going up, so I decide to cut loss. Bought back at 0.8154. loss is US$85.59.
19. On 1 September I had shorted 10,000 NZDUSD at 0.6962, stop level at 0.7080, target level at 0.6766. NZDUSD fell to a low of 0.6805 before rebounding up. I believe the overall trend for NZDUSD is still down, but it is oversold now, so we may see a rebound. I decided to take profit first, bought back at 0.6871, profit is 91 pips, US$90.60.
20. On 1 September I had shorted 10,000 USDJPY at 109.53, stop level at 11.46, target level at 108.20. Surprise resignation of Japan Prime Minister may caused market to lose confidence in Yen, hence decide to take profit on USDJPY first. Bought back USDJPY at 108.51, up 102 pips, profit is US$82.00.
21. On 26 August I had shorted NZDUSD at 0.6970, stop level at 0.6673, target level at 0.6673. Seeing that USD started to weaken, I decided to take profit on NZDUSD at 0.6936, profit is US$34.
22. On 26 August I had also shorted EURUSD at 1.4712, stop level at 1.4915, target level at 1.4415. I decided to take profit at 1.4630, profit is US$82.
If you are interested to know my trading system, I am willing to reveal my trading system for free. Just open a trading account at ForexYard (click here to open), deposit your funds in, then inform me by sending an email to me at metal.commodity@gmail.com.
Its zero cost to you as there are no fees incurred in account opening. This is better than paying few thousand dollars for trading seminars or signal subscription that do not produce good results.
Risk Disclosure:
Forex trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to participate in the futures trading markets. Don't trade with money you can't afford to lose. The past performance of any trading system or methodology is not necessarily indicative of future results.
100% Success Rate for USDJPY Trades
Some of the best forex traders that I know are currency pair specialists. They may be specialised in EURUSD, AUDUSD or GBPUSD.
I did not build BL Trading System to be a currency pair specialist but it turns out that it has tremendous success rate (100%) for USDJPY.
12 USDJPY trades were executed and all turned out to be profitable:
1. On 9 October I had shorted 20000 USDJPY at 101.13, stop level at 102.01, target level at 99.30. Dow Jones continues to move down despite all the plans by Federal Reserves resulting in Yen strengthening. I took profit on USDJPY trade at 99.76, profit is 123 pips, US$243.59.
2. On 2 October 2008 I had bought 20,000 USDJPY at 105.41, stop level at 104.39, target level at 106.89. USDJPY moves up after job data is announced. I decided to take profit at 105.69 as there seems to be some resistance at 106.00. Profit is 28 pips, US$55.39.
3. On 29 September, I had bought 20,000 USDJPY at 104.96, stop level at 103.30, target level at 106.76. U.S. stocks rose as growing expectations that lawmakers will salvage a $700 billion bank- rescue package helped the Standard & Poor's 500 Index recover more than a third of yesterday's 8.8 percent plunge.
This news has helped to push USDJPY up. I took the opportunity to sell USDJPY at 105.90, profit is 94 pips, US$179.93.
4. On 23 September I had bought 10,000 USDJPY again at 106.24, stop level at 104.50, target level at 107.75. Seeing that USDJPY has difficulty break 107.00 resistance, I decided to take profit first at 106.64. Profit is 40 pips, US$43.51.
5. On 23 September I had bought 20,000 USDJPY at 105.75, stop level at 104.78, target level at 107.78. USDJPY fell after hourly stochastics shows oversold, I decide to take profit first. Sold at 105.94, 14 pips profit, US$26.44.
6. On 16 September I had shorted 20,000 USDJPY at 106.32, stop level at 108.10, target level at 104.69. USDJPY fell below 104.69, so position is closed. Profit is 163 pips, US$311.40.
7. On 12 September I had shorted 20,000 USDJPY at 107.40, stop level at 108.50, target level at 106.10. In the early Asia hours of 15 September, target level of 106.10 was reached, so my position was closed with 130 pips profit, US$236.06.
8. On 10 September I had shorted 10,000 GBPJPY at 186.18, stop level at 188.26, target level at 183.31. GBPJPY rises above 188.26, so my stop is triggered.
9. On 8 September I had shorted 20,000 USDJPY at 108.43, stop level at 110.00, target level at 106.94. USDJPY went below 106.94, reached my target level, so position is closed. Profit is 143 pips, US$264.44.
10. On 4 September I had shorted 10,000 USDJPY at 108.18, stop level at 109.30, target level at 106.91. USDJPY slided down, I decide to take profit first as tomorrow US is going to announce Non-Farm Payroll. Bought back at 107.43, profit is 75 pips, US$69.81.
11. On 2 September I had shorted 10,000 USDJPY at 108.82, stop level at 109.85, target level at 106.85. The whole forex environment turns 360% today, decided to take profit on USDJPY first. Bought back at 108.40, profit is up 42 pips, US$35.75.
12. On 1 September I had shorted 10,000 USDJPY at 109.53, stop level at 11.46, target level at 108.20. Surprise resignation of Japan Prime Minister may caused market to lose confidence in Yen, hence decide to take profit on USDJPY first. Bought back USDJPY at 108.51, up 102 pips, profit is US$82.00.
If you are interested to know my trading system, I am willing to reveal my trading system for free. Just open a trading account at ForexYard (click here to open: Forex Trading Online : Currency Trading Broker by FOREXYARD), deposit your funds in, then inform me by sending an email to me at metal.commodity@gmail.com.
Its zero cost to you as there are no fees incurred in account opening. This is better than paying few thousand dollars for trading seminars or signal subscription that do not produce good results.
Risk Disclosure:
Forex trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to participate in the futures trading markets. Don't trade with money you can't afford to lose. The past performance of any trading system or methodology is not necessarily indicative of future results.
Three New Trades From BL Trading System
1. Bought 20,000 AUDUSD at 0.6705
Stop level at 0.6590
2. Sold 20,000 USDCHF at 1.1740
Stop level at 1.1820
3. Bought 20,000 EURJPY at 125.25
Stop level at 124.25
Link: https://www.mql5.com/go?link=http://www.forexandbinary.com/