Shorting Copper for the first time

Selling some Copper. This is my first time in this commodity, and I'm entering it as I was reading one of Mish's blog posts, and it got me thinking.


Very interesting chart also, looks like decision time and could break lower, with much lower long-term support. Plus I believe in a continued US housing slowdown, and also the price of copper and other commodities are significantly higher than in the not-so-distant past, and so there will be plenty of companies out there trying to increase mining and hence increase supply. At some point extra supply will come on line, probably at just a time when the market doesn't need it!

Let's put on a small position and look for a 40 point break lower. Selling Mar '07 future at 301.20 in £1/cent, which should make us £4,120 if we can get it back at 260.00. Let's have a good think about cutting if it gets to 315.00.

Well at least I can trade rates ok...covering Bund and Gilt short

Bought back my £30/tick Bund short at 116.86 (that's the March Bund future) and bought back the £10/tick short in Gilts at 108.22 (again the March contract). Still think that long-term rates are heading much higher from here (February rate rise in the UK looks a done thing, so short rates at 5.25% and looking like they are going up means 10y yields will struggle to stay as low as 4.70%, which is about where they are just now), but I've made £5,000 on the combined position since putting it on last month, and that was without having the full position I wanted on. So we'll take that and look for another entry point.

 

Bund market having a really tough time the last 2 weeks, down about 2 points from the highs, and feels like it's trading very poorly, but we may see a little support around these levels (~3.85% on 10y Bunds) for a little while.

2 weeks to go, still up, just!

Well, I guess one of the plus points is that I am UP this year at least. Not quite the million quid I was after though.

It's pretty clear to see from the P+L that FX and Equity Indices hurt me.

In FX, it was exclusively Cable (GBP/USD) which killed me, I traded from the short side all year, as it rose ~20 big figures. I used options on it also. Would be easy to say that I misjudged the trend, but most of the gain was from mid-April to mid-May (1.75 to 1.90) then over the last month its up another 6 points. So maybe the solution is a stop-loss system, and then keeping myself out of the market for a few weeks, or at least betting smaller size. If I'd used stop-losses, and bet small then added to WINNING positions only, I'd have minimized losses (£26,000 in total). My problem was that I was SCARED to not have the short position on in size if the market was going to move!

Equity Index problem looks the same, sticking to a losing position all year instead of realising an early loss and walking away. Down £28,600 this year trading SP500 and DOW 30, both index and options. Although it did give me more comfort having my individual stock long positions on despite being bearish most of the year, and I'm up £21,900 on those stock picks.

The better stock picks...up £4,500 on GM, up £2,000 on Heinz, up £3,000 on Cisco, up £6,000 on Pipex, and the best one, up £14,000 on British Telecom.

In commodities, I missed the bull run in Gold despite being an early believer, I kept missing my entry, and only had one small trade on. But the main winner was on Crude, where I shorted it around $73-74 a barrel, and bought it back 9-10 points lower, despite having some hairy moments when it ramped up to $80. Very very nearly pulled the trigger on cutting losses on that one.

And in rates, did some good trading in Treasuries (up £8000), Bunds (up £2500), and chucked in about £1000 each on Gilts and EURIBOR futures.

Lets hope (yes HOPE) for an equity setback coming into Xmas, and I'll be using the festive season to think how I should be positioning for 2007. That will be my year!

Any thoughts, comments or ideas, feel free to post!

Equities killing me...but I still believe...buying DOW Puts, and Dec '07 Eurodollar

P+L update this weekend.

 

My Dec DOW Put/Call rolled off (I had bought 11,000 Puts and sold 11,500 calls)...wow. Down £10,000.

 

So this time, I'm just spending money on the Puts, so at least I know my downside. Buying Mar '07 DOW 12,000 Puts, at 122 in £10/point.

 

And following CPI today coming in at 0.0%, it looks like the FED has done its work, overdone the hiking cycle as usual, and should embark on some serious rate cutting next year. So I'm buying Dec '07 EuroDollar at 95.225 in £100/bp. Lets look for a 20bp move higher then re-consider the position.

 

 

That'll do for now. Over the next week or two I'll be shuffling the portfolio around and looking to position for next year. I also want to discuss my trading style, I'm not happy about a couple of trades from this year, I think the use of stop-losses is necessary. Possibly combined with a mandatory week out of that particular market!! For example on stocks, I just didn't want to lose my position, but losing £10,000 on more than one trade is a sure sign of bad trading discipline.