You have all heard the news.
Commodities rebounded from the biggest drop in almost two weeks after Goldman Sachs Group Inc. advised investors to return to raw materials….When Goldman Sachs analysts made their call yesterday, many commodities traders must have felt either relieved or angry. Relieved if they were long already, and angered if they were short. That is the long and short of it!
Why should anyone who was bearish feel angry? Perhaps it is because of what “naked capitalism” discusses in the post “Goldman Recants its $200 a barrel, ‘Super Spike’ call for oil”? But you would surely want to read ‘The Reformed Broker’ who noticed that Goldman made quite a contradictory call the same day!
While you are mulling about all this, perhaps a bit of advice from Peter Brandt would help. Peter has written a book titled “Diary of a Professional Commodity Trader”, and David Blair a.k.a The Crosshairs Trader has provided us with a quick excerpt…actually six major points. Enjoy!
13 Comments
After reading the “Crosshairs Trader” article and six major points, I’d humbly add one additional tenet. You must enjoy the challenge…you must want to do this. Otherwise, it’s only work.
Yesterday when I saw the “Goldman Sachs” news in one of the websites I thought GOOD for India !!!!!! How ?
The whole World knows what happenned when GS raised Crude price target in 2008(they had raised it from 140-150 $ to 200 $ ) !!!!!!
Sachin, the analysts who made that call are just as human as any of us. It is not the erroneous call that upset people. Every single analyst worth his salt has made not one,but several mistakes. Typically we are upset when someone makes a call that is different ( opposite to ours!) That is human nature.
Sir,
You are right everyone makes mistakes , but I am talking about the timing (esp. most Funds world over) of the call and how they mislead people.Every investor cannot be well informed.Most people take these calls on face value.
I still remember the Citi Group’s “Sell” call on Reliance Infra(Rel Energy then) @ 485-500 in May- June 2007(One of the most Bullish charts @ that time) and it goes to only 2600 in 7 months . Ok , lets consider it to be a mistake. Again what they do , give a “Buy” call @ 1550-1600 in May 2008 and it comes to only 385 in 5 months. I get a doubt whether most of these calls from various Funds(& so called HNIs)are to Dump Positions ??
Sachin, your point is well taken!
sir, will you please check the charts of natural gas futures trading on mcx india? i m going through your blog regularly and it s helping me in making my trading decisions and learning wave analysis. i think wave 2(abc correction) has been completed in natural gas futures and third has begun. please your inputs.
Hello Vivek,
What is the symbol or Ric for this contract. I will take a look sometime.
sir, symbol is NATURAL GAS which trades on MCX , india
One thing is clear. Big institutions like Goldman Sachs tell what they want the investors to do, so that when there is sufficient money on the table, they pull the rug from underneath small time traders/speculators. And they get away with it for they are the guys funding political establishments around the world to ensure market creation as well as their safety. Well money rules!!!
Sachin Advai keep one thing in mind. Markets are places for people to come to….. in order to disagree. The bigger fool theory is constantly at work here. We’d have less excitement and entertainment in our world…..if it did not. Sheep have been sheered since the beginning of time and yet they’ve not evolved. Your evolution is accelerating (as is mine) in the discovery and application of Elliott Wave analysis. We choose not to be sheered again.
in dollar terms, if we short crude in rupees and rupee depreciates,we dont gain much but crude short in dollars will fetch more
Rajesh, I think you are expressing your view of Usd/Inr here, and not that of crude.
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