Tag: cme

  • What are Carrying Charges and how do they influence hedging decisions?

    | | Education

    In order to fully get the “error” in selling grain at harvest and then buying calls to replace that grain, so as to still participate in possible higher prices you need to understand how carrying charges work in the grain markets. The definition of “carrying charges” is: an expense or effective cost arising from unproductive assets such as stored goods or unproductive assets; includes interest, insurance and storage costs. Basis is the price difference between cash and the underlying futures contract (at a specific time), and to take it a step further you need to take a serious look at … Read more What are Carrying Charges and how do they influence hedging decisions?
  • How a Commodity Trading Advisor may use Expectancy & R Multiples

    | | Education

    When you trade the markets, you really don’t know the exact probability of winning or losing on a given trade. Additionally you won’t know exactly how much you will profit or lose.  What a CTA does is extensive historical testing on his / her concepts, and trading strategies to get an idea of what to expect.  They will also pull huge data samples of market prices from either a data vendor or from real-time trades, in order to get a clearer picture, and to really try and nail down the “expectancy” of their particular methodology and trading system.  After investigating trade-by-trade … Read more How a Commodity Trading Advisor may use Expectancy & R Multiples
  • Do You Know How To Survive A “Locked Limit” Market?

    | | Education

    A futures or commodity market is “locked-limit” when trading is suspended due to prices moving the exchange-stipulated daily limit, this can happen for one day (it can even lock-limit and then trade off), or if given a news event monumental in nature, the market may stay “locked” for as many days needed for market participants to come to an equilibrium.  If you trade futures and commodities and you have experienced a locked limit market it can be either one of the best days of your life (if you’re on the right side), or a complete disaster (E.g.: Sept. 11th or the … Read more Do You Know How To Survive A “Locked Limit” Market?
  • Bulls Being Lured in With Dropping Rig Counts

    | | Energy

    Written by:  Bryen Deutsch   It appears CNBC is running out of credible analysts who are bullish the oil complex. The calls for $65+ WTI seem rather sparse. In fact, is there anybody in their right mind who still thinks crude oil is going higher? Of course. We all know the Keynes’ saying “The market can stay irrational longer than you can stay solvent.” But seriously, how much longer can the bulls continue this irrational move on what appears to be a bearish fundamental backdrop?   The Baker Hughes Rig Count is really one of the few remaining bull arguments … Read more Bulls Being Lured in With Dropping Rig Counts
  • Every Investor Needs an Edge… What’s Yours?

    | | Education

    When a CTA or Money Manager is testing or back-testing their entry signals one of the most important aspects they look at is if the technique’s they are using has a distinct “edge”, for the time-frame they are trading (short-term, swing, long-term, etc). Positive price movement is when the market goes in the direction of the trade.  In other words when you buy, it’s good when the market keeps going up, and bad when the market moves lower.  When you sell short, it’s good when the market moves down and bad when the market moves against you and goes higher.  … Read more Every Investor Needs an Edge… What’s Yours?