The ACD Method
- Thread starter sbrowne126
- Start date
I should also point something else out. Commodities for the most part are known as a sellers market vs stocks which are a buyers market. What this means is that while stocks have a long term upward bias due to their cashflows, futures are the opposite. This is very important to understand if you trade futures. Futures cost money to hold. I'm talking about the cash market here. Since futures are used to hedge the positions of the cash holders, they tend to have a downward bias.
There is also an economic reason for this. And that is, higher prices affects demand. That is not the case in stock. So when you look at a chart like soybeans, one has to understand that soybeans is not AAPL. At some point, if prices are too high, it will affect demand. Also, when one crop is too strong, it forces farmers to farm more of that crop thereby increasing supply.
When commodities get too low, it forces producers to hoard supplies. When demand is too strong they unload their supply in the market. So just something to keep in mind when trading commodities.
I would agree with you. They probably do.
I'm not saying that I can short all levered etfs and make a billion dollars. I was saying that 1) DGAZ was the play. We are timing nat gas. I wouldn't expect the trade to last forever. I would expect to be out relatively soon. At 100% borrow you're paying 2% per week. You can overcome this in a properly timed trade.
2) Long term you can make a killing on some of these. The borrow rate for all of them across the board is not 100%.
Thanks for the targets. I took off 2/3 of the trade on the pop on the numbers.
Yes, but you can't look at the math that way. The 2% per month is equal to the decay you are hoping to earn from the ETF. So what I'm saying is the directional aspect of the trade is separate from what you hope to earn from the decay of the 3x ETF. So the question you have to ask is, does the 3X ETF decay more then the borrow rate. I believe they are the same. So that cancels that out. So now we are left with just the directional trade. That would bring us back to trading the most liquid ETF which is UNG or the futures.
BTW, the numbers I gave you were for last month's contract. Natty rolled today to the new contract. The new numbers are 2.41 and 2.50 for the monthly and QTR.
Are they correlated?
Quote from Maverick74:
Are they correlated?
depends on your income bracket I suppose. Personally I like Dunkin but
I have to pay up when I am with the boss/gf. Long term I like sbux over dnkn, those losers really need to get wifi. I think this will revert in the next few days so it may be worth a few shekels....
Re-visiting the thread and saw the soybeans chart / levels. Interesting to see the different levels of other players.
I have soybeans just recently rising above the weekly and monthly levels with the quarterly level up above at around 1540.
I have soybeans just recently rising above the weekly and monthly levels with the quarterly level up above at around 1540.
Bonds continue their march higher...hitting the 143 handle in ZB here. Although equities have shown a nice pop off of the quarter a down. Bonds have confirmed their quarter aups and continue to defy the equity market and march higher.
I honestly don't know what to make of this...large disconnect!
I honestly don't know what to make of this...large disconnect!