Today was a needed break. Not from the markets as a whole, but really from having an open position. For the first time since I started this whole adventure back in June, this was the first time that I didn’t have an open position and also most importantly in soybeans! I needed that. It was time I took a step back to assess my progress so far and also to reacquaint myself with the myriad of other commodities out there other than, that most versatile of grains, the soybean.

Soybeans, if you are interested, actually closed up 7.25 cents. A lot of the news stories I’ve been reading have been talking about how the commodities markets shrugged off the continued recovery of the dollar today. I’ll admit that I was a little surprised to find that after yesterday’s drop, but should I really? It seems typical of the panic and fear that frequently visits itself upon the exchanges. There one day and gone the next.

I have no regrets however, I stuck to my trading plan such as it is. I had placed a reasonable stop loss based on the Average True Range and a weekly low. In fact, I didn’t actually realise how close the price was to my stop loss until I checked my account and found that it had been hit. Previously, I probably would have moved my stop loss lower as the price moved lower and this time that would be working out fine for me at the moment but in the long run, such an action is simply inviting ruin.

I’ve been trying to bring in cognitive biases into my posts as they are an idea that I find very useful for looking at my own behaviour. Curtis Faith provides an excellent explanation of some cognitive biases that can impact on trading in his book, “Way of the Turtle.” I am sure that I will be discussing this book at some later stage. For now, I just want to talk about the outcome bias. This is a tendency to judge how good a decision was, based on its result rather than the factors that went into why the decision was made. In the past I know that I would have been really annoyed with getting stopped out and I would have been frantic to get back in. Today, I had no such feelings. I think that is progress.

Instead, I read up on other commodities such as gold, silver, copper, coffee, sugar and oil. This is part of my fascination with the markets, all these every day items that are traded across the world and each day there is a power struggle to either push the price up or down. It was good to be able to broaden my horizons again. I also read some interesting articles on trading specifically on trading discipline and expectancy. Both seemed to be timely reads for me.

I’m not sure if I’ll open any positions before my WRAP UP this weekend, it seems unlikely that I will as I haven’t found the time to do any serious analysis of any trends in the markets. Instead, I think I’ll just enjoy this unexpected time-out.

Open Positions


Account Details

Account Balance: €585.48
Open Position P/L: €0.00
Account Position: €585.00
Overall P/L: -€1464.52

Break on Through to the Other Side


Soybeans sailed right on through the $10 mark. The underlying fundamentals have been stacking up for a while now with increasing demand and falling supplies and since August have manifested themselves in a huge push upwards of the price. No doubt, the falling dollar and the continued march upwards of wheat have also been a major influence and today was no different.Wheat made a new record today at $9.3925. If the fundamentals are strong in soybeans, then they are doubly so for wheat at the moment. It is possible that what we have been seeing in wheat recently will be happening in soybeans next year. This all depends on how the planting goes in the coming months. If wheat continues upwards as it might do and reach its own $10 mark, then soybeans are going to be hit hard and won’t be able to recover the 5 million acres that it needs to.

The new record in wheat doesn’t evoke much regret anymore and I’m starting to think that perhaps I should get back in with a new long position. Then again Jim Rogers has already stated earlier this week, that he wouldn’t buy wheat at the moment; “I don’t like to jump on a moving bus.” I respect that man’s opinion. So I start thinking should I be entering a short position in wheat, before I finally come to my senses and remember that I do have a plan and any time I have strayed from that, the result has been serious damage to my account.

Back with soybeans, the USDA reported export sales at 745,600 metric tons, nudging close to the upper end of estimates. A new three year high was hit at $10.1775. Prices were last at this level in May 2004, when it hit a high of $10.64. Prices are still a bit away from that but the March and July ’08 contracts did reach $10.41 today.

Tomorrow is another Friday and there is another report due out from the USDA, this time on grain stocks, so there is some new info for the market to play with but the consensus appears to be that there will be no suprises. So I’m expecting the usual short-covering towards the end of the day tomorrow following this week’s continued action breaking upwards.

Open Positions

Asset Contract Position Change
Soybeans November 2007 Long +18.63

Account Details

Account Balance: €271.48
Open Position P/L: €583.52
Account Position: €855.00
Overall P/L: -€1195.00