You should know if you trade commodity futures what the contract expiration dates are.
After all if you are trading Lean Hogs and you forget you could end up with 40,000 pounds of carcasses on your door step – which is not my idea of a good day.
Actually you would have to work pretty hard for this to happen. Your broker keeps a very close idea on your open positions and will likely inform you to exit your position or roll over your contract so as to avoid exactly this delivery issue. Remember if you were short you would need to actually have to have the required quantity and quality of the deliverable commodity on hand.
I like to play it safe and make sure that I am fully aware of the expiration dates.
Well in a funny turn of events a Hedge Fund had taken delivery, somewhat forcibly, of a ship as payment! That’s right Elliott Capital Management took control of the ARA Libertad, a training ship owned by the Argentine navy, whilst it was docked in Ghana.
Argentina have been avoiding paying for a 2001 bond and after a recent court hearing Elliot Capital Management went all pirate and seized the assets.
So even if you are a Sovereign State know that the debt collectors will find you.Continue Reading...
1) If you do two things at once, one of them will be done wrong
You can read in many places that you should only risk 1% of your equity per trade.
It’s so prevalent that it’s almost taken as gospel. I think that’s a good thing as it promotes protecting your account and if you have a system with a decent risk return your winners ought to cover your losses leaving you nicely up – keeping it all gravy for you.
Now take a look at this chart showing a poll from the Wall Street Journal:
Link to chart here
Now granted, this is about a mistake that mutual fund investors feel they have made most often, but it shows that at least 40% of respondents regret having been too cautious.
While the general advice of risking no more than 1% a trade is sound advice, you have to:
“Risk no more than you can afford to lose and also risk enough so that a win is meaningful”
It’s important to consider not just what you are willing to lose but also what you want to win and how you are going to trade to make that a reality.
There are two sides to this equation that are worth thinking about. Have you considered both? Having too little risk might mean not achieving your financial goals.Continue Reading...
SP500 trades above breakout level while the broader Russell 2000 and the more volatile NASDAQ reversed and now trading below breakout level.
Negative divergence between related markets is a subtle message that all is not well. Such divergence does not necessarily translate to “sell everything,” but it does suggest “proceed with caution.”Continue Reading...