Commodity Trading:
Commonly Asked Questions
about SEASONALS
| INTRODUCTION
TO SEASONALS | READING
SEASONAL CHARTS | SEASONAL FAQ | USING
SEASONAL STRATAGEMS |
How
did Commodity Futures and Equity Analytics develop this
strategy?
Seasonal analysis is one of the oldest
styles of analysis. W. D.
Gann published works on seasonal tendencies back in the 1920’s.
With the advent of modern computing power, seasonal analysis is
much simpler. We have gone
back to historic price records and lined up all the same dates for each
year and gone through every possible permutation of dates.
For example, all April 5ths for each year are grouped together.
If it is not a trading day, then the previous trading day is used.. Only those date combinations that hypothetically have been
profitable 12 out of the last 15 years and meet the rest of our stringent
requirements are presented in the Seasonal
Stratagems report. We then
have our research department analyze each seasonal strategy in the frame
work of supply and demand cycle theory to determine if there is a logical
reason for this phenomena. Once
this is completed, we share our findings with our clientele.
Why don’t the dates in the Historical
Break-Down match the Seasonal Rule dates exactly?
Because our method of analysis uses the
number of trading days from the beginning or the end of the month, the
corresponding dates will vary based upon what is the first trading day of
the month. We use this
method, as opposed to using the exact date, such as the 15th,
because we feel that this method more accurately reflects the realities of
trading.
How
are the suggested stops arrived at and can I use a closer stop?
The suggested stop is arrived by taking the
worst price during a profitable trade and subtracting 1 tick from that.
We want to give our trades enough room to grow, without assuming
too much risk. Therefore, we look at historically how much a trade has
gone against the position before returning to a profit before the exit
date (or the highest price achieved on profitable short trades and the
lowest price achieved on profitable long trades).
Can you use closer stops?
Of course you can, but remember that you have to give your trades
enough room to grow because prices rarely move in one direction for very
long periods of time. All markets have corrections within the context of greater
trends, and the medium term trend is what we are trying to isolate in the
Seasonal Stratagems.
Why
do you only analyze the last 15 years of prices for your studies?
We could just as easily look at the
previous fifty years in some markets, but the forces effecting supply and
demand are constantly changing. CFEA
feels that fifteen years is enough history to be objective with
not too much being concentrated on factors that are no longer applicable
to the markets.
Aren’t
these Seasonal Strategies just the result of fancy computer studies?
Yes and No.
There has been volumes of literature written about the seasonal
nature of the commodity markets. Many large trading firms use seasonal studies in conjunction
with other methods when analyzing price behavior, therefore we wanted to
give our clients the same service. But,
remember that these studies were developed using the benefit of hindsight,
and are therefore HYPOTHETICAL representations of past behavior. In
addition, hypothetical trading does not involve financial risk, and no
hypothetical trading record can completely account for the impact of
financial risk in actual trading. No representation is being made that
any account will or is likely to achieve profits or losses similar to
those shown. In fact,
there are frequently sharp differences between hypothetical performance
results and the actual results subsequently achieved by any particular
trading program.
Should
I use other types of analysis in conjunction with these ?
Yes, the
Seasonal Stratagems are simply market tendencies.
As such, you should look for confirmation from your favorite
patterns or indicators. No single
form of analysis is fool proof, even our Stratagems, so never enter a
position without fully understanding the risks involved.
| INTRODUCTION
TO SEASONALS | READING
SEASONAL CHARTS | SEASONAL FAQ | USING
SEASONAL STRATAGEMS | |
www.CommoditySeasonals.com
