| marlincobb - 5/19/2015 08:43
Thank you JPartner for replying. I am not sure what you mean about hedges to become trades and trades become hedges.
Hi marlincobb,
What I am referring to is the tendency for people to get an opinion that the market is due for a correction. Those hedges were meant to manage risk, and then become a trade because of an opinion. A well known poster who no longer is with us lifted his live hogs hedges at 80 and was a scale down buyer because he had an opinion. He should have had two accounts and left his hedges in place and if he wanted to speculate, he could have in the other account. Inversely, somebody maybe be a buyer or seller in a market - using his hege account- trying to catch a wiggle because of an opinion(I am definitely guilty of this myself). If the trade goes against him, then the trade mysteriously gets morphed into a hedge and that justifies the loss and likely the position is carried into the future with hoping to at some point to be made whole again. It easier to justify the loss as a hedge and than to admit that we were wrong. We have all done it at some point....
I think your ideas are correct on how it should work Unfortunately, like ZM mentioned, the large majority do not use the futures in that way. IMHO, thinking because you have invested sweat equity and have grease under your finger nails in the creation of a physical product somehow gives you more insight than others and puts you ahead of the curve, is complete garbage. If you want to trade, trade equities, bonds, lumber, currencies etc, something you know nothing of - in a spec account. At least then you are starting with a level playing field versus carrying in a whole bunch of preconceived notions that are likely wrong...
Edited by jpartner 5/19/2015 15:35
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Is building a AG based Trading Room a good idea?
