November and December 2020
Following the US election, I did trades in soft commodities. I tried to follow Hershey's buying frenzy in cocoa futures. They decided to buy and hold futures until delivery, rather than buying from Ivory Coast producers who sold their product at a significant premium.
The main worry when you enter a trade like this is that maybe you joined the market after Hershey had stopped buying. That won't necessarily be bad – other traders joining the herd like yourself, could still push the market above your entry point. The charts showed that the last time cocoa traded at these levels, it didn’t go higher. The first days of the trade went well. It gave a decent profit and I thought the prices will keep climbing. Then the reversal happened. I decided to close immediately for a small loss. The idea was decent, but it didn’t work. Better to have the small loss, than to hope it will recover.
It turned out to be the right decision. I find that the best trades tend to go in your favor quickly without bad retracements.
I did other trades based on technical levels in soft commodities. Fundamentals for me were bullish at the time, but I decided to give technical trading a go – most of these commodities tend to obey strong technical levels.
The results were similar to the cocoa trade – they went in my favor first, but then reversed. I again closed them for small losses.
One of the last good trades I did was shorting the Dow soon after it hit 30k for the first time. I had a good entry and wasn’t risking much. It went down, but I decided to move my SL to entry. The next day it was triggered before the market continued it’s move down. You can’t be angry with a trade that didn’t lose you money, but if I had kept my SL at the original position, I would have made a profit.
These were the last few trades which I did for the year. It was now time for reflections and preparations for next year.
The final performance figure in terms of return for the year was 14.73% net return on my initial capital, after commissions and other costs. I didn’t beat the SP500 but was very close. I am sure that after taxes, I did better than most investors who hold their money in an index fund. That’s because taxes in Bulgaria are very low.
I look forward to 2021. You will get regular updates about everything that is going on with my trading.