Commodity Futures Trading Using Fuzzy Logic and Market Synchronization Clues, PART 2

There's nothing better than fuzzy logic for determining when a commodity market has begun a new trend and is starting to synchronize. Read on to find out exactly what this is all about...

Observation From Trading Notes:

Commodity

"After an e-mini futures top forms over 1-2 days with big contracts and multiple tops, look for the last rally to labor up all day AFTER a sharp and fast down opening with poor A-D line. Key: It will spike or touch the 5 min chart channel one last time. This is the best place to short."

This is another familiar e-mini futures pattern. In this case it's a big set up for a big move. There are always some kind of preparations for a big move. Your job is to identify them. These are patterns that will repeat every 5-10 days or so. The anemic rally is the key. It's like the market is running out of gas and getting tired. That last stretch to tap the channel in a weakened state is an e-mini short trade you should jump on. It is a "high probability" trade.

If you stalk this trade, focused and patient, you will find your share of these kinds of set ups. Notice they are not rigid, computer system type patterns. Making sense of them requires the fuzzy logic of the brain that is looking at many indications and patterns at once. You will get to the point where you can simply feel you've been there before in a general way and know that this means a short sale.

There's no computer program that can do the same integration at this time. There will be someday, but for now the extraordinary commodity futures traders, the superstars who earn $millions+ a year, are mostly discretionary (fuzzy logic) people using computers to do the raw number crunching - the grunt work.

Good Trading!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Commodity Futures Trading Using Fuzzy Logic and Market Synchronization Clues, PART 2

History Of The Commodity Market

The commodities market is both a wholesale and retail market. The term commodity is a generic term for all natural resources used in the industry for the production of finished or semi-finished products, either as components or as energy entering cycle of production or delivery of the product. These markets are exchanged between other copper, gold, wheat, cotton and oil.

The players in this market are producers (farmers, mining companies, industrial ), financial institutions (banks, asset managers, institutional investors, hedge funds, etc.), corporations (as issuers in the primary market, or as investors), and individuals. Since the early 1980s, there was a strong development of derivatives (forwards, futures, options, warrants, swaps) so that today the bulk of trade takes place via these products. Generally, the commodities market, like other markets elsewhere, transactions take place either on organized markets or on the OTC market, also called OTC (Over-the -counter market).

Commodity

Organized markets, which are grants and futures markets are markets in which transactions are standardized (in terms of quantity, quality, maturity for merchandising, etc.) and there is no counterparty risk (that is to say, failure of the counterparty) due to the existence of a clearing house that comes between any buyer and seller and check their creditworthiness with daily margin calls. In contrast, the OTC market is a market where the buyer entered into the transaction directly with the seller. The transactions are less standardized, but also better fit the specific needs of operators.

The commodities market is now almost entirely paperless (more as paper) and electronic (very few transactions "open outcry"). Trade is mainly conducted via the CME Group, which contains the CBOT (Chicago Board of Trade), CME (Chicago Mercantile Exchange), NYMEX (New York Mercantile Exchange) and COMEX (New York Commodity Exchange). It is currently the largest trading exchange futures (contracts) with the widest choice of commodity contracts. LME (London Metal Exchange) and ICE (Intercontinental Exchange), formerly NYSE, are the other two major stock exchanges trading commodities.

History Of The Commodity Market