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Friday, May 23, 2008

Futures Series - Leverage

Challenge Accounts:

Investing Account Balance:
Stock / Futures Trading Balance: $735.61 (Deposit processing.)
Online Savings Balance: $27.15

Personal Trading Thoughts: Well, I accept the loss from the LHM8 68 Put trade, a loss of $74.31. Was a good try, and wouldn't have been so bad, had it not been for the unbelievable shinanigans of the open outcry pit guys (See yesterdays entry. They literally tried to steal the option from me). We were ahead by $14.00 in the trading accounts. Now we're back down to a loss thus far of $59.68. But not too bad considering we've had 3 losing trades. See what I mean guys about the importance of money management? Regardless, on the trading front for the Challenge project? We have good news. I've moved my main accounts away, and the only thing I have at optionsXpress now, is a small MS position in one sub-account, as well as my Challenge Project. So I'm going to link up that account to Covestor, to track the challenge project. I'll have a link, as soon as Covestor gets back with me.

Personal Investing Thoughts: Pretty mixed day yesterday. Listened to the shareholder presentation web-conferences. Not too bad. Business looks great, especially for FRO, which has returned me 49% on my money thus far. HOLY CRAP - LOOK AT BUD GO!

We've been discussing commodity futures. We learned what a commodity is. We learned that commodities are traded in contracts, and those contracts have specific sizes; and that such contracts expire in certain months. Today we'll discuss another aspect of commodity futures. That has to do with the leverage that's possible in futures. Leverage can be great, but it can also prove disasterous . . .

* * *

Investing Account Balance: $247.27
Stock / Futures Trading Balance: $735.61 (Deposit processing.)
Online Savings Balance: $27.15

Total Trades: 4
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $65.50
Average Loss: $79.84
Accuracy Rate: 25%
Average Reward: $179.75
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Down - ($59.68)

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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