Commodity Trading Advisor Jobs

Over the last 16 months, most stock markets have declined over 50%. Some individual companies have been wiped out completely. The effect on many individual portfolios has been devastating. Commodity Trading Advisor Jobs

So, how does an investor or trader know when to sell? Well, my perspective is from someone who focuses primarily on price and volume, rather than the fundamentals of the underlying business. Admittedly, Ive owned some shares that have fallen a bit. I intended to hold them as very long term investments. It’s been quite painful to watch them decline to current levels. This market has clearly demonstrated that the buy and hold strategy can devastate your portfolio if you don’t use a form of protection, such as options, stock index futures. Shorting strategies.

Now, back to the question of when to sell. However, some hedge funds and Commodity Trading Advisors actually made a lot of money in 2008. Some made big bets on a collapsing credit market and shorted the financial stocks. Traders that I’m more familiar with, have had significant success in trading in the commodity and currency markets. Their strategies will be the focus of this article.

Generally speaking, the majority of Commodity Trading Advisors (CTAs), traders that make a living by managing funds through the trading of futures markets and options on futures, can be regarded as trend followers. Among the more famous of these traders is John W. Henry, the owner of the Boston Red Sox baseball team. Trend following traders capitalize on the big trends that occur in the financial markets from time to time. In 2008, there were a lot of big trends in the markets. Probably the single best trend that these traders made easy money on has been in the downtrend in Crude Oil. After peaking at $ 150, this market has traded below $ 35 recently. The majority of trend following CTAs would’ve entered new short positions from $ 120 down to $ 100. The move from $ 100 down to $ 40 equates to $ 60,000 for each contract held by these traders. At todays margin requirements, that’s better than a 400% return.

Trend following traders don’t try to pick tops or bottoms. They wait for a market to tell them when a trend may be starting. They’ll exit when the market indicates that trend may be over. There is no magic formula for determining when these trends will occur. When the high price will be set. When the bottom will be found. During periods where the markets are choppy, these traders don’t make money. Tend to experience some significant drawdowns on their equity. However, with the strict application of risk management in their portfolios, some of the better performing traders will reduce the volatility of their portfolios.

So how does this apply to stocks? Well, most individuals want to be able to catch that hot stock when it moves 500% or more. Unfortunately, many will experience that gain, then watch it evaporate as they hope for more gains from that stock. The professional trader, however, will have separated his/her emotions from the stock. Exited when indications were that the trend was over.

However, there is no one particular price level. Indicator that the professional relies upon to exit his position at once. Rather, he’ll exit at different price points within the trend. Here are some ideas that’ll help you determine when it’s time to start taking profits in your stock. When to exit altogether. Commodity Trading Advisor Jobs

Lets suppose you purchased shares of JRCC as it was breaking out to the upside from a small base back in April of 2008. This breakout occurred at about the $ 20 level. The stock then rallied over 300% in less than three months to a high close over $ 60. The astute trader wouldn’t have exited his entire position at that level, since it’s impossible to pick a top. However, the smart trader would’ve begun unloading some shares around the $ 55 level. would’ve completely exited the position between $ 45 and $ 50. Thats a pretty sizable gain in three months! Since then, JRCC has traded as low as $ 5.05 in November.

So, what were the signs that this stock was hitting its peak? The first sign occurred on June 19th. The stock had closed higher on four consecutive trading days, with a gain of over 30% during that time frame. The stock was going to the moon. Eventually, when a stock goes to the moon, it must come back down to earth. On June 19th, the stock opened up over $ 2 at the open, then closed down almost $ 3 for the session. This was the widest trading range of the move up so far. That days volume was its highest as well. This was the first sign of distribution. The smart trader would’ve begun to exit either at the close or during trading the next day.

Two days later, JRCC had closed at a new high, over $ 62. On that day, its trading range shrank significantly, as did its volume, compared with the previous few trading days. The next day, on June 24th, the stock closed down almost $ 6. Nearly 9%, its biggest down day of the trend. Volume was higher than the previous day, indicating more distribution. The next day, it was down another 5% on even higher volume. This bottom formed a new swing low. It proceeded to rally for the next three days. Volume began to decline. It couldn’t take out the recent highs. On July 2nd, the stock broke through the short term swing low and closed down over $ 13. 22% on its highest volume. The stocks back was broken. Traders following this stock should’ve exited all positions by the close of trading on this day.

Now, if you want a more basic idea for exiting a high momentum stock such as this, simply exit 50% of the position when it makes a 10 day low in price and the rest when it makes a 20 day low in price. This is an unemotional way of exiting a stock position. Sometimes, you’ll exit a position way to early in a trend, since stocks will shake out shorter term traders. A 20 day low is a good sign that an existing, intermediate term trend is over. Longer term traders who may use a methodology such as the CANSLIM method to enter momentum stocks at 52 week highs may instead exit position if the stock makes a ten week low and then a 20 week low. However, you’ll give up substantial unrealized gains by waiting for a 20 week low. it’s a good idea to pay attention to the price and volume relationships discussed previously. Or, you can exit at a 5 week low and 10 week low.

These are just some ideas for when to exit stock positions after they’ve made significant moves. There is no one perfect exit strategy. However, if you trade in this manner consistently, you’ll experience nice profits in the long run. you’ll be forced into 100% cash when the market experiences the type of bear market we’re seeing now. Commodity Trading Advisor Jobs

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