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A view on commodities

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  #11  
Old 18th March 2014, 09:13 AM
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Default Re: A view on commodities

Economic indicators and their impact on commodities - Thanks to Santosh2010 who had posed this on his thread





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  #12  
Old 18th March 2014, 09:39 AM
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Default Re: A view on commodities

Quote:
Originally Posted by DSM View Post
Trading commodities :

Am creating a thread on commodities, as of late, I have been trading these more than stock derivatives. The purpose of this thread is to discuss generic ideas and information pertaining to trading commodities. So basically, this will include post on the following :

Precious commodities - Gold and Silver
Energy - Crude and NG
Base metals - Copper, Nickle and others
Others - Agri commodities (maybe if any trading ideas are seen there)

Appreciate input from all commodity traders. And good luck to all.
Good One DSM !!

I have already subscribed to this thread !!!
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  #13  
Old 18th March 2014, 10:48 AM
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Default Re: A view on commodities

Events to watch on this week’s economic calendar

http://www.investing.com/news/econom...alendar-272113

Investing.com - The economic calendar for the week ending March 21 contains reports on the U.S. housing sector, inflation and factory activity, but the main event that investors will be focusing on is the Federal Reserve’s two-day policy meeting, concluding on Wednesday. Meanwhile, the euro zone is to produce what will be closely watched data on inflation. Here are the main events to watch out for:

Federal Open Market Committee Meeting
This will be the first Federal Reserve board meeting with Janet Yellen at the helm. Investors expect the Fed to continue to taper its bond purchasing program by $10 billion to $55 billion, despite recent weak U.S. economic reports. The central bank is also expected to hold interest rates at record lows. The Fed meeting is to be followed by a press conference with Janet Yellen and the bank is also to publish its forecasts on inflation and economic growth.

U.S. inflation report
The U.S. inflation report is due to be published on Tuesday. U.S. inflation has remained at a very low level in recent years, allowing leeway for the Federal Reserve to hold the benchmark interest rate close to zero.

Euro zone inflation report
The euro zone is to release official data on the annual rate of inflation on Monday, amid concerns over deflationary pressures. European Central Bank President Mario Draghi said Thursday the strong euro was dragging down inflation, indicating growing concerns that the appreciation of the euro could undermine the fragile recovery in the euro area. The annual rate of inflation in the euro area came in at 0.8% in February, well below the ECB’S target of just under 2%.

U.S. housing sector data
On Tuesday the U.S. is to release official data on building permits and housing starts. This will be followed by a private sector report on existing home sales on Thursday. Housing starts dropped 16% in January as a result of severe winter weather, while building permits fell 4.6%. Weather conditions remained bad in February, so forecasters are expecting only a moderate rebound of 3.4% for housing starts in February.

German ZEW
The ZEW Centre for Economic Research is to publish its report on German economic sentiment on Tuesday. The index deteriorated slightly in February amid concerns that the economic recovery in the U.S. is losing momentum and forecasters expect the index to continue to tick lower this month.
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  #14  
Old 22nd March 2014, 08:57 AM
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Default Re: A view on commodities



Commodities provides an opportunity to a trader to profit from trending moves - It is more liquid, has news or a certain logic backing the moves. I consider trading Gold, Crude, Copper, NG, Nickle and Silver (track the first 4 actively) to be profitable - Just like one would trade Nifty or BankNifty, but with more depth and with a larger trading window. Commodity markets are open from 10 AM upto 11.30 PM, but gets more active in the evening. While large trading time may be considered a negative, I trade these as per my convenience - it is not necessary to be in the market all the time.

Why trade commodities? Well why not? There are many mis-conceptions among the traders that commodity trading is risky. Well I found the contrary to be true, once I overcame my untested bias. Thanks to Tamil Trader, whose thread I started following, and reading up on the factors affecting crude price, I took a few baby steps to learn the logic or arugment behind an entry. Following up with chart time, has made me much more comfortable trading commodity rather than Nifty or BankNifty. From baby steps, over time, have increasingly traded larger positions (all major contracts – Not mini) to just over 40 contracts a day for scalps or larger intraday tending moves. (I have been reviewing my trades and find that I should improve upon this by reducing the no. of trades to larger profit per contracts - as I am much more comfortable to hold the positions for longer time and knowing the rational for holding or taking profit. This is still work in progress.)

Some traders hold the view that fundamentals or news does not affect prices of stock or commodities, and one can trade basis chart itself. While the latter part may be true, I find knowing and understanding fundamentals affecting the commodity prices helps a trader to get into a position quicker. For e.g We have weekly release of crude inventory data. I get the news on Sharekhan’s TradeTiger within a minute. Within about 5 minutes of release of this data, have learnt to understand at what level I should enter for long or short, knowing which way the prices will move. How difficult can it be to infer that e.g : Crude inventory data is twice or half the times as expected by analyst? Which way should one trade? Or for the matter NG the storage is x times more or less than forecast? (Trading post release of inventory data for the past 5 weeks has been 100% spot on. Profit atleast 4-5K/lot. I don’t ask for more as I close the position as soon as the target is reached and well before end of day)

How about other factors that traders can infer to trade commodities. Will post the rational for the same later - but surely commodity price have economic news and fundamental backing the upmove or down move. For e.g Gold has crashed post the news of Fed. tightening. (see charts) Good NFP (Non Farm Payroll data), is a sure positive for crude or copper but negative for Gold and Silver. Why? We will analyze that. Strong Dollar is adverse for commodities. High interest rates will mean strong Dollar and will be negative for commodity prices. I am making these notes and compiling other technical and statistical data, that I will share as we move along.

Is commodity trading dangerous.? One can hold untested beliefs but that will not help. For e.g There are many traders who have their own thread on commodities. Madhav Reddy is a profitable scalper on NG and Crude, and he post his trades live. Don’t know how it is possible to trade and post, but hat’s off to him for doing so. He has gathered an admirable no of fans – and he trades only basis chart reading. Link here the proof for those traders who would be interested in trading commodities. One can look up the charts at the time his call is given to understand the reason for the call basis price action.

http://www.traderji.com/energy/92842...r-trading.html

Posting three important charts, 5 Day, 15 minutes timeframe.

Gold


Crude


Natural Gas


More later
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  #15  
Old 22nd March 2014, 11:31 AM
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Thumbs up Re: A view on commodities

Quote:
Originally Posted by DSM View Post


Thanks to Tamil Trader, whose thread I started following, and reading up on the factors affecting crude price, I took a few baby steps to learn the logic or arugment behind an entry.

Madhav Reddy is a profitable scalper on NG and Crude, and he post his trades live. Don’t know how it is possible to trade and post, but hat’s off to him for doing so. He has gathered an admirable no of fans – and he trades only basis chart reading.
My congrats to you for observing various thread owners and their views. The thread of Madhav reddy is a good one. but small traders can apply his strategy on the silver micro initially to know well about scalping. nowadays, there is no post of tamil trader and some rumors (alive or not) also about him.

So we can concentrate on the active threads.

Dear DSM,

If you follow any particular style of trading in commodities, you can start a new thread in commodity section by posting your real trading diary as already you have more fans.

This will be useful for all the traderji members
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  #16  
Old 22nd March 2014, 02:03 PM
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Default Re: A view on commodities

Thanks Mr. mangatha for your views. I am just posting mine on the forum. With an open mind, and those who can find some good insight or value, they can learn and benefit. To a mind that is closed, no rational, proof or logic will be good. There is a flat earth society. If you Google it, you will still find that some people believe that the eart is flat, the moon landing is a hoax, Loch Ness monster exist. To each one his own.....

Tamil Trader, whatever people may say, I am grateful to him, because I tried to understand what he said, and even though I held opinions differently regards to strategy, I traded differently, but certainly I learnt a lot from him.

What I am trying to do on this thread is surely not to give calls. It's detrimental to oneself, how so ever right or wrong the call maybe. Rather, I am just sharing my views, insights and learning how I look to trade commodities. The difference between giving calls and explaining the technique and rationale behind taking positions is like providing text book answers to he students in the first instance as compared to teaching them to think and solve problems. Which one is better.? No doubt, many will prefer the easy way.... Till such time the guru discontinues or disappears.

My 2C.



Quote:
Originally Posted by Mr. Mangatha View Post
My congrats to you for observing various thread owners and their views. The thread of Madhav reddy is a good one. but small traders can apply his strategy on the silver micro initially to know well about scalping. nowadays, there is no post of tamil trader and some rumors (alive or not) also about him.

So we can concentrate on the active threads.

Dear DSM,

If you follow any particular style of trading in commodities, you can start a new thread in commodity section by posting your real trading diary as already you have more fans.

This will be useful for all the traderji members
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  #17  
Old 22nd March 2014, 05:47 PM
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Default Re: A view on commodities

Technical Analysis from fxempire for the week of March 24

The light sweet crude market rose during the session on Friday, breaking above the $100 level at one point during the day. However, the market proved to be a little bit heavy above that level, as profit-taking push the market back down. This makes sense of course, it was a Friday session and a lot of traders probably did not we carry risk over the weekend. With that being the case, we are looking for a move above the highs in order to start buying although we recognize the fact that the $102 region will cause a little bit of a bumpy ride higher. We are not interested in selling, simply because the week formed a hammer. That being said, the longer-term signal almost always overrides the shorter-term signal, and as a result we are long only at the moment.
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  #18  
Old 22nd March 2014, 09:36 PM
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Default Re: A view on commodities


Understanding Dollar - Commodities relationship. Or why there is an inverse price movement of Dollar to commodities? (well most of the time)


It’s a logical enough argument that commodities like gold, oil, and grains are all priced in dollars. Therefore, if the dollar weakens the value of the commodity shouldn’t be penalized. With that logic, it should strengthen to maintain its value on the global stage. So all things remaining equal, the commodity should move in the directly proportional opposite direction of the dollar. This happens most of the time. But there are exceptions. For example, from December 1998 to September 2000 the relationship of oil and the dollar was positive, When one went up, the other went up.
http://www.commodityonline.com/news/...0-3-18661.html

My Notes :
The exception I understand happens, as things do not remain the same at all times, and there may be at times a positive co-relation to the normal inverse relationship between dollar and the commoditie/s. These I guess are exceptions but having a logical reason. For example in times of geo political tensions (Iran-Iraq war, Opec Oil quotas, Kuwait Invasion) there are concerns of supply constraints. Hence crude will firm up, no matter which direction dollar will go.

There is another subtle reason that is impacting the traditional relationship of dollar-commodities. While from the time of its discovery, commodities such as copper, crude, gold have been used as a production/consumption/hedging assets. But with the advent of ETF's, Billions of dollars are locked and invested into commodities. E.g SPDR Gold Trust, Hence commodities have now an additional reason to move based not only on demand-supply of producers-consumers but additional demand or otherwise from investors. In short, commodities have now also become an INVESTING asset


Having said the above, we will continue to assume and understand for the purpose of our trading that when Dollar is up = Crude will be down, as happened recently.

http://www.investing.com/news/commod...outlook-273110
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  #19  
Old 23rd March 2014, 08:52 PM
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Default Re: A view on commodities

In the evening session, Our indian traders are not watching the currency movements. but INR is traded in the international market.

Always, currency reflects in crude oil.

Dear DSM, you said, sometimes, it is not going same.

The reason is , we are trading in the future contracts. if the fundamental is good, it is trading in premium. if the fundamental is not good, it is trading in discount. but , Spot price is always calculated on the basis of INR only.

So, Just analyse about premium and discount in the commodity future contracts.
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  #20  
Old 23rd March 2014, 09:05 PM
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Default Re: A view on commodities

Thanks Mr. Mangatha for bringing that up. Which site do you use to track USDINR post closing of our markets?

Quote:
Originally Posted by Mr. Mangatha View Post
In the evening session, Our indian traders are not watching the currency movements. but INR is traded in the international market.

Always, currency reflects in crude oil.

Dear DSM, you said, sometimes, it is not going same.

The reason is , we are trading in the future contracts. if the fundamental is good, it is trading in premium. if the fundamental is not good, it is trading in discount. but , Spot price is always calculated on the basis of INR only.

So, Just analyse about premium and discount in the commodity future contracts.

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