Tag Archives: mechanical trading program

Silver Rally is Over….For Now

We’ve discussed at length over the last two weeks that commercial producers in most of the commodity markets have come out in force to unload their future production on the first quarter commodity rally. Fore example, we’ve noted that gold producers haven’t been this bearish since 2013 and that the crude oil glut would take more than a year to work through. See, “Gold, Oil, Grains – Was that It?” for the background we discussed last week. Last night’s tragedy in Brussels has added a bit of a boost to the precious metals as expected. If this boost is insufficient to force short covering or, attract new buyers, it’s over until prices decline.

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Trading the 2015 Cattle Market

The live cattle market was up 28% in 2014 and the Feeder cattle market was up 32% for the year. The cattle markets made all-time highs in 2014 as the U.S. had its smallest slaughter in 20 years. This came as no surprise as we’ve discussed the declining trend in the domestic herd several times. Based on the cheap feed prices, cheap fuel costs and a strong Dollar, this should be another year of declining supply as the U.S. begins to grow its herd to meet the growing foreign demand.

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Bonds Creeping Towards Lower Yields

The multi-year bond rally has continued unabated. Therefore, it’s no surprise that our mechanical, long only trading program following the commercial traders in the bond market has had a good year winning 7/8 trades as you can see on the chart below, for net profits of more than $5,000 per contract.

The current setup suggests that this roll should continue.

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Mechanical Trading Program Data Issues

I’ve been designing, testing and publishing trading systems since I left the floor of the Chicago Mercantile Exchange(CME) more than 15 years ago. I had my first program, DCB-Bonds published in Futures Truth in 1999. This system is still actively traded and bounces in and out of their top 25 systems and is currently sitting at 26th. My philosophy with system design has always been to start with a fundamental premise and begin testing from there. Occasionally, circumstances change and can render the fundamental premise moot. This was the case for a suite of mechanical programs I published in December of ’05 in Futures Truth.

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COT Signals Mechanical Wheat Trade

Here is an example of a successful trade our mechanical trading program generated based on the commercial long hedgers in the Commitment of Traders report.

commitment of traders trading signal
Commercial long hedgers supporting market finally justifies our long entry. Protective stop was placed at swing low.

Here’s a quick link to this wheat trading system along with two others and their historical hypothetical equity curves. We offer 33 in total. We use both the strengths of the commercial traders as well as the weakness of the speculators to stack the swing trading odds in our favor.

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