Advice for trading metal futures

[BREND]

There are 3 points to look out for in metal trading. If the 3 points are matched, the trade will make money 70% of the time. However it is not common for all the 3 points to match. But when they are matched, it will be a great money making opportunity.

More details in....Moderator's note- state your 3 points here please and try to join in discussion on ASF. Thanks!

 

[ducati916]

Re: Advise for trading metal futures

There are 3 points to look out for in metal trading. If the 3 points are matched, the trade will make money 70% of the time. However it is not common for all the 3 points to match. But when they are matched, it will be a great money making opportunity.

More details in ....

1. Know what is the motive of hedge funds now.
Hedge funds nowadays are very powerful. They can buy up 50% of the world copper inventory, freeze the supply and let the natural demand in the physical market push up the price. The real victims are the real consumers of the metals.

Recently is a good opportunity to short Aluminum. Why?

1. Hedge funds bought a lot of put options for Aluminum, Jan 2007 contracts, recently, meaning they are betting that Aluminum price will fall.

Based on past history, few days before the expiration date of the options, they will push the price down, and make sure that they earn money for their options.
I call them bullies in the commodities markets.

Hedge Funds, approaching 9000 @ last count, that's a fair few Hedge Funds.
However, they are not all [9000] involved in the commodity markets.
The Funds are closed books; viz. you nor I know exactly their positions.
As to buying 50% of the world copper inventory, do you have some facts & evidence to corroborate such a statement?

How do you know Hedge Funds bought Puts?
You looked at open interest?
Did the Open interest have a name and address attached?

How exactly are they going to push the price down?
Sell Futures?
Double down on their directional bet?
Would you do that?
If not, why would you expect them to do so?

Technical analysis.........pffffft.

I can live with the China thesis.

As to a stronger influence on commodities currently, ETF's.
Gold, Silver, were launched last year. Prior to their launch, and after their launch, gold went parabolic, and silver did quite well in addition. Agricultural ETF's are being launched currently, Wheat, Sugar, Coffee. Certainly the hedge Funds that do play the commodity markets will be aware of these funds, and may well front run them. Various Oil ETF's are also planned. [Heating, Crude]

Poor old Mr Retail, will buy them near the top, and suffer the falls as the buying momentum dries up

jog on
d998

 

[BREND]

Re: Advise for trading metal futures

Hedge Funds, approaching 9000 @ last count, that's a fair few Hedge Funds.
However, they are not all [9000] involved in the commodity markets.
The Funds are closed books; viz. you nor I know exactly their positions.
As to buying 50% of the world copper inventory, do you have some facts & evidence to corroborate such a statement?

Answering your questions in blue:

How do you know Hedge Funds bought Puts?
You looked at open interest?
Did the Open interest have a name and address attached?

I know because I'm a metal broker, we can ask our counterpart in London.

How exactly are they going to push the price down?
Sell Futures?
Double down on their directional bet?
Would you do that?
If not, why would you expect them to do so?

Are you sure???

Technical analysis.........pffffft.

Technical is only one of the factor to look at, not everything, and I agree, sometimes not very useful.
I can live with the China thesis.

As to a stronger influence on commodities currently, ETF's.
Gold, Silver, were launched last year. Prior to their launch, and after their launch, gold went parabolic, and silver did quite well in addition. Agricultural ETF's are being launched currently, Wheat, Sugar, Coffee. Certainly the hedge Funds that do play the commodity markets will be aware of these funds, and may well front run them. Various Oil ETF's are also planned. [Heating, Crude]

Poor old Mr Retail, will buy them near the top, and suffer the falls as the buying momentum dries up

jog on
d998

I rather buy into resources stocks than ETFs.

 

[Jadefox]

Brend,

Mind elaborating on the 'Three points' ?

 

[BREND]

Brend,

Mind elaborating on the 'Three points' ?

Its here:
http://basemetal-trading.blogspot.com/2006/12/suggested-strategy-for-metal-trading.html