Beartrap

[Gordo]

Re: Beartrap

Thanks, Lukester, I needed that good news report.

As James Dean said in Giant, I think I'll just "ride along" for a while.

[Gordo]

Re: Beartrap

Coincidence? See Bold and Underlined below.

FUTURES MOVERS
Oil closes at one-week low on OPEC production talk



By Moming Zhou & Polya Lesova, MarketWatch
Last Update: 3:16 PM ET Nov 12, 2007
SAN FRANCISCO (MarketWatch) -- Crude oil fell nearly $2 a barrel on Monday and closed at the lowest level in a week on speculation members of the Organization of Petroleum Exporting Countries may consider increasing their output at an upcoming meeting.






Crude-oil futures on the New York Mercantile Exchange finished the session down $1.7, or 1.8%, to $94.62 a barrel, the lowest close since Nov. 6. The contract dropped to as low as $93.54 a barrel earlier in electronic trading.
Saudi Arabia's Oil Minister Ali al-Naimi said Sunday that OPEC, which controls more than 40% of the world's oil production, will discuss increasing production at its next meeting later this year, the Associated Press reported.
"Gulf countries do not control prices, but they try as much as possible to secure supplies and market security," Ali al-Naimi told the AP.
OPEC heads of state will gather in Riyadh for a summit this weekend. The next scheduled OPEC policy meeting is on Dec. 5 in Abu Dhabi. It wasn't clear which meeting the Saudi Arabian minister was referring to.
"Although others in OPEC have subsequently denied that such a topic will be on the agenda, the statement is being taken seriously by the markets," said Edward Meir, an analyst at futures brokerage MF Global.
In an interview with the state-run Islamic Republic News Agency, Iran's OPEC Gov. Hossein Kazempour Ardebili said the country has no plan to discuss raising production targets at OPEC's heads of state summit in Riyadh.
Most of OPEC's members have reached their maximum production capacity, with only Saudi Arabia having about 2 million per day surplus capacity. Iran has surplus capacity of 50,000 a day, according to the Energy Information Administration.
"The oft-criticized 'speculative interests' will be singled out by [OPEC] members, and those like Iran, who cannot produce [more], will oppose increased output levels vociferously," said John Kilduff, an analyst at MF Global, in a research note.
Speculation
Data from the U.S. Commodity Futures Trading Commission show non-commercial buyers, those including hedge funds and other large speculators, have been increasing their long positions, which are bets that the price of oil will rise.
Non-commercial net long positions rose to 105,816 as of Nov. 6, the highest since the end of July. Net long positions are the difference between long position and short positions, which are bets that the price of oil will fall.
Net long positions reached a historic high of 127,491 on July 31, when oil topped $78 a barrel. After that, net long positions slid and touched a low of 25,178 at the end of August, when oil fell below $70 a barrel. Net long positions have been rising since September, along with oil prices.
Meir said it was shortly after non-commercial net long positions peaked in July that the price of oil began to fall and suggested the same thing might happen again. "Given this possible signpost, we may see the current run also run out of steam here."
Call options
December crude call options, which are another bet on the rise of oil prices, will expire on Tuesday. Holders of call options have the right, but not the obligation, to buy a futures contract at a fixed price.
Many call option holders were betting December oil futures contract would pass $100 a barrel, so they could exercise the option at $100 and make a profit, said James Williams, an economist at WTRG Economics, an energy research firm.
"The Saudi statement could not have come at a worse time for December call option holders," said MF Global's Meir.
With oil prices lower than $95 a barrel, most call option holders betting on the $100 oil would likely not exercise the option and let it expire worthless, said Williams.

[bart]

Re: Beartrap

Lukester, you are a smart man. I have read that 95% of all futures/options traders lose money.

If you have a link to any actual facts that will back that up, please post it. To the best of my knowledge, it's way too high.

[Gordo]

Re: Beartrap

Bill McCready says 90% (See quote below) but I have read the loss rate is actual 95%. I will look for this 95% quote.


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[Gordo]

Re: Beartrap

For 95% loss quote, see quote below from Lee Zarda Trading Commodities web site.

"Trading commodities is a tricky business. It is a well known fact that the majority of trades in the commodities market lose money... 95% to be exact."

[*T*]

Re: Beartrap

For 95% loss quote, see quote below from Lee Zarda Trading Commodities web site.

"Trading commodities is a tricky business. It is a well known fact that the majority of trades in the commodities market lose money... 95% to be exact."

This must be BS. Futures & options are derivatives; zero-sum, for a loser, there is a winner. Is not most speculation done through derivatives in commodities?

95% of tradeRs losing however I can believe...

[GRG55]

Re: Beartrap

This must be BS. Futures & options are derivatives; zero-sum, for a loser, there is a winner. Is not most speculation done through derivatives in commodities?

95% of tradeRs losing however I can believe...

Doesn't that then mean, by definition, it's always 50-50?

[Gordo]

Re: Beartrap

[quote Lukester, you are a smart man. I have read that 95% of all futures/options traders lose money.[/quote]

That's what I said.

[bart]

Re: Beartrap

For 95% loss quote, see quote below from Lee Zarda Trading Commodities web site.

"Trading commodities is a tricky business. It is a well known fact that the majority of trades in the commodities market lose money... 95% to be exact."

Trading commodities is tricky yes (and trading stocks is tricky too)... but that's just a quote and an assertion, not facts. Check the Yale study called "Facts and fantasies about commodity futures".

There's at least as much extant false and misleading data about futures as there is about stocks.

For example, here's the long term track history on *net* DJIA dividend returns (after CPI+lies):

[GRG55]

Re: Beartrap

Trading commodities is tricky yes (and trading stocks is tricky too)... but that's just a quote and an assertion, not facts. Check the Yale study called "Facts and fantasies about commodity futures".

There's at least as much extant false and misleading data about futures as there is about stocks.

For example, here's the long term track history on *net* DJIA dividend returns (after CPI+lies):

Geez bart...you keep this up and pretty soon we're all gonna have nuttin' to believe in other than the Tooth Fairy... :p

[bart]

Re: Beartrap

Geez bart...you keep this up and pretty soon we're all gonna have nuttin' to believe in other than the Tooth Fairy... :p

She's a babe... ;)

I'm in a damned if I do and damned if I don't situation on much of my research and facts and charting work, since much of it does not show a very pretty picture about the lies and false data that's out there.

But the bottom line is that what one doesn't know can hurt one... and the various Wall St. and other scum sure do deserve to be exposed to the full light of day.

[Rajiv]

Re: Beartrap

It should also be reiterated that stock trading is a zero sum game.

Ultimately, it is only the dividends that are paid out to the investors that matter. The price of the stock (ideally!) represents the NPV of the returns (through dividends) to the owner of the stock.

Hence the importance of Bart's chart!

[bart]

Re: Beartrap

It should also be reiterated that stock trading is a zero sum game.

Ultimately, it is only the dividends that are paid out to the investors that matter. The price of the stock (ideally!) represents the NPV of the returns (through dividends) to the owner of the stock.

Hence the importance of Bart's chart!

*gasp!* :eek:

Thanks. You are one of the very few who also holds the zero sum view on stocks... and it gives me an excuse to link my long term Dow chart with a CPI+lies correction. ;)






Note that data does not include dividend yields but does clearly show the "return to the mean" characteristic.

As of last week, the approximate after CPI+lies yearly return of equities is roughly 2%/year since 1900 and the total return is about 3%/year... and that's before any corrections for substitution bias or survivorship bias.

[c1ue]

Re: Beartrap

Doesn't that then mean, by definition, it's always 50-50?

Pareto's principle: 80% of profits are made by 20% of people.

Thus while every futures transaction has a winner and loser (zero sum game), the individuals who win likely win disproportionately.

Thus you can have 95% of the population losing with their losses concentrating in the 5% winners.

[bart]

Re: Beartrap

Pareto's principle: 80% of profits are made by 20% of people.

Thus while every futures transaction has a winner and loser (zero sum game), the individuals who win likely win disproportionately.

Thus you can have 95% of the population losing with their losses concentrating in the 5% winners.

The studies and stats I've seen are that about 70% of new futures traders lose most or all of their entire account.
I've never seen any studies or facts that show a 95% loss rate.