Trading cocoa

[AlexBB]

I wish to trade cocoa futures (LIFFE rather than NYBOT because of the hours the exchange is open for)as I see the supply side conditions offering significant volatility. What are the views of traders- is cocoa generally a good market to trade for this or other reasons.

I am not impressed by the spread offered by my SB company (8 points)on cocoa LIFFE. Can anyone recommend another trading platform where I can get lower trading costs ?

Also I would welcome any inputs from the trading community about how USD/GBP exchange rate fluctuation affects the London cocoa future price....I am finding the potential impact of currencies a bit confusing and could be mitigated by avoiding LIFFE and trading NYBOT instead.

Thank you very much

 

[minx]

You could trade the actual futures through someone like IB. 8 pip spread isnt too bad if you are trading it long term, Capital Spreads has a spread of 6 ticks so not too different from the current mkt.

The current cocoa futures mkt is 4 tick spread 9x26 lots.

As for how tradable it is, well I hate it, too jumpy, basically any kind of disruption in Ivory Coast and the mkt spikes.

 

[Pippppin]

I cannot see that cocoa is much different from trading any other commodity market. Very profitable if you know what you are doing

 

[minx]

I cannot see that cocoa is much different from trading any other commodity market. Very profitable if you know what you are doing

Then I obviously dont!

 

[Jack o'Clubs]

London cocoa looking interesting here - seems to have formed a bit of a bottom at 806 or so (I went long today).

 

[TWI]

I have traded cocoa on and off for many years. I have to say that it is one of the most awkward markets to read from a chart and best chance is having good contacts in the commercial sector including on the ground in Ivory coast. The latter being a political hell hole anyway. Most of the "official" news you read coming out of there is all lies.
I have yet to see a system that can successfully trade it and those that can make money over time are usually mean reversion rather than trend.
As for FX , some people are very active in the arb but due to the fx it is bit more complex than the coffee arb. Unless you really do want to trade cocoa I think you will find it easier to make beans elsewhere.

 

[minx]

I have to say that it is one of the most awkward markets to read from a chart[.....] Unless you really do want to trade cocoa I think you will find it easier to make beans elsewhere.

Completely agree. I can usually get systems to run on almost anything but Cocoa makes me want to tear my hair out....

 

[AlexBB]

Cocoa on the up

London cocoa looking interesting here - seems to have formed a bit of a bottom at 806 or so (I went long today).

And you have been laughing evern since JoC !!! On the chart you put up, I note that it uses the 18day MA. What other indicators and methods do you use? Why fof instance sis you call teh bottom there and not teh double bottoms reached at 960-970

cheers

 

[Jack o'Clubs]

And you have been laughing evern since JoC !!! On the chart you put up, I note that it uses the 18day MA. What other indicators and methods do you use? Why fof instance sis you call teh bottom there and not teh double bottoms reached at 960-970

cheers

Thanks. Easy to look clever in retrospect, I wish they all went like that but I can assure you they don't, LOL!

The MA on the chart is a 50-day. I use that for long-term trend direction, and then use a customised MACD for intermediate and short-term timing of entries. It's adapted from the Chick Goslin method (basically trend-following) - there's plenty on these boards about CG if you're interested. The reason I posted this trade up was simply that my standard entries were giving me a green light on a chart that also looked like it was giving a good pattern signal, effectively a double positive. That's why I went for this one and not necessarily other good pattern entry triggers. I've been in and out on the way up, so not just held it all the way through, which in retrospect would have been the better option. I'm 'out' at the moment, by the way, and my last trade was a week ago when I tried to short it...

 

[AlexBB]

Trading method

Thanks. Easy to look clever in retrospect, I wish they all went like that but I can assure you they don't, LOL!

The MA on the chart is a 50-day. I use that for long-term trend direction, and then use a customised MACD for intermediate and short-term timing of entries. It's adapted from the Chick Goslin method (basically trend-following) - there's plenty on these boards about CG if you're interested. The reason I posted this trade up was simply that my standard entries were giving me a green light on a chart that also looked like it was giving a good pattern signal, effectively a double positive. That's why I went for this one and not necessarily other good pattern entry triggers. I've been in and out on the way up, so not just held it all the way through, which in retrospect would have been the better option. I'm 'out' at the moment, by the way, and my last trade was a week ago when I tried to short it...

Thanks for your answer - its very useful as I am right now involved with developing some sort of trading methodology (trying to keep it simple)..I'll keep a look out for the CG method...while I am trawling through the message boards.