Yesterday I pounded through a great read, Winner Take All: A Top Commodity Trader Tells It Like It Is, by William R. Gallacher. I’ll gather my thoughts and post what I took away shortly.
Overall on the portfolio side, I’m sure you notice some major changes from about a month ago (when things were running quite reckless and out of control). I am doing my best to reform my old ways – here’s how I’m currently approaching things:
- Since we’re in a flat out bull market for commodities, I’m buying anything that hits a 20-day high. Anything. Could be crude oil, feeder cattle, or sugar – doesn’t matter. Everything goes higher in a bull market, so I’m letting the market sift these out rather than me buying and holding something – which I have been doing.
- If a current position hits a 20-day low, I sell. Again, no questions asked. I’ll re-enter the position on a new 20-day high. Easy – automates the exiting process.
- Not have more than 25-30% of the portfolio “at-risk” at any given moment. In other words, if the world went to hell in a handbasket in 0.001 seconds flat, here’s what I would lose.
- I’m working on a spreadsheet to calculate this, which I am still tinkering with. I’ll share when finished. Basically the idea is that I have trailing stops at the 20-day low of each position. The difference between the current price and the stop (times the amount of leverage) equals how much I can lose on that position.
- The new return goal is 2% per week. If I break this, great. The idea is to try not to lose money in a given week. I figure if I can hit this # approximately, the returns will be great. Helps me to focus on the weekly # rather than trying to triple my portfolio in a year (which is what 2% will do over 52 weeks)
This week in the market, we’ve seen a big rally in the softs and the grains. My entry method put me into corn and soybeans a couple of weeks ago, and I am thankful for it this week. How about that to instill some confidence! Sugar is also showing some life – nice to have you back, sugar!
| Date | Position | Qty | Month/Yr | Contract | Strike | Call/Put | Entry Price | Last Price | Profit/Loss |
| 12/07/07 | Long | 1 | MAR 08 | Corn | 415 | 438 1/4 | $1,162.50 | ||
| 12/14/07 | Long | 1 | MAR 08 | Corn | 439 | 438 1/4 | ($37.50) | ||
| 11/09/07 | Long | 1 | MAR 08 | Coffee ‘C’ | 126.05 | 133.80 | $2,906.25 | ||
| 11/28/07 | Long | 1 | JAN 08 | Rough Rice | 13.080 | 13.125 | $90.00 | ||
| 11/28/07 | Long | 1 | MAR 08 | Soybeans | 1108 | 1175 | $3,350.00 | ||
| 06/04/07 | Long | 2 | JUL 08 | Sugar #11 | 10.05 | 10.84 | $1,769.60 | ||
| 08/01/07 | Long | 1 | JUL 08 | Sugar #11 | 10.48 | 10.84 | $403.20 | ||
| 10/18/06 | Long | 1 | JUL 08 | Sugar #11 | 12.08 | 10.84 | ($1,388.80) | ||
| Net Profit/Loss On Open Positions: | $8,255.25 | ||||||||
| Current Cash Balance | $58,796.45 |
| Open Trade Equity | $8,255.25 |
| Total Equity | $67,051.70 |
| Long Option Value | $0.00 |
| Short Option Value | $0.00 |
| Net Liquidating Value | $67,051.70 |
Cashed out: $5,000.00
Total value: $72,051.70
Weekly return: 12.75%
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