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I have never traded commodities, there are seasonalities, reports and just myriad of other factors that I am not that knowledgeable about. Just /ES options on the futures side.
As far as diversifying, It really depends on what commodity you are familiar with. I started out trading equities, indices and options so that's what I am familiar with (/ES). I personally think that /ES is good starting point and if you want to try some other commodities start small and see how it goes.
Overall diversification. I have a total stock market international etf and bond and treasury fund. My allocation is more US equities 80%, 10% bonds and 5%international 5% treasury. I also have about 7 equities that I have positions in, either stock or options
Volatility is good for the market and trading.
Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
Can you help answer these questions from other members on NexusFi?
This is true. What I do see though if someone is leveraging 150 million + every month and controlling a high percentage of the OI that could be a max pain situation if market takes a steep turn.
Volatility is good for the market and trading.
Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
Yes, I am concerned with being concentrated on one position. I am trying to ensure there is low correlation between trades. I traded /CL the past 2 months and have learned a lot and managed to even come out of that massive drop with a small profit.
The problem I am finding is there are not many underlyings with high liquidity. Basically only /ES /CL /6E and /ZN
That is the value of the /ES put contracts that were sold ((1915*50)*10). I make note of that value on option trades to get idea of how much I am leveraging at a given time. The margin required was $23,618.
Volatility is good for the market and trading.
Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp