BASIC TECHNIQUES
The Other miNY
The Crude Mini Cometh
by David Penn
Minis? Energies? For the little guy, trading energy futures just got easier.What were you doing in the autumn of 1990? Well, if you were a futures trader, and it was sometime in late August or early September, then you were probably on the long side of crude oil, a ride that ended up taking fortunate traders to a high of more than $40 a barrel by October.
Missed that one, did you? Well, how about the move down in 1993? Or even better, the collapse in 1998, when crude oil got dangerously near $10 a barrel? I bet the shorts made a killing then!
Oh, you weren't in on that one, either. Well, what about natural gas? That run in 2000 -- the one that ended with natural gas futures topping $10 -- would have made up for a whole year's worth of misses and messed-up trades, right? No, wait a minute, don't tell me: you don't trade natural gas, either. So, no point in asking you about the rally in 2003 with crude oil, the one that saw crude oil future rocket up to ... Right, right. Gotcha. Sorry. Pretend I never brought it up.
MO' MINIS
Among the long list of frustrating obstacles between the average trader and his or her dreams of trading mastery (and the great riches such mastery entails) is the phenomenon of finding a great trading opportunity in a trading product that is simply too big for a given trader to handle. Unlike stock trading, in which a trader can easily scale positions from as low as 10 shares to as many as 10,000 shares or more, futures contracts have for many years been one-size-fits-all.
...Continued in the September issue of Technical Analysis of STOCKS & COMMODITIES
Excerpted from an article originally published in the September 2004 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2004, Technical Analysis, Inc.
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