Prior to 1996, most in the agricultural markets didn’t spend too much time worrying
As an example, look what happened to Pacific Ethanol, Inc. (PEIX)
after President Bush mentioned cellulosic ethanol in his State of the Union
address in 2006. At first, everyone thought he just mispronounced something
about energy. Figure C.1 shows the jump in price and the sustained upward
movement for this ethanol producer. This seemed to be a total surprise until
one considered the desire by politicians to reduce the U.S. dependence on
foreign oil and the impact of hurricanes on oil and gas production. What
The goal of this book was to show that there are consistent characteristics that events have over time. You can begin to build a strategy or portfolio
and be ready to take advantage of these events should they start to appear.
Of course, no new event will be exactly the same as the previous event, nor
will the exact timing be the same. This means that the trader needs to be
flexible and creative in figuring out what area will be impacted and when.
This book is somewhat the antithesis of program or model trading.
World event trading (WET) requires an intimate knowledge of numbers and
statistics, but not as the sole determinant for making money. This is more
nuanced, more difficult, and more exciting. The results can be spectacular,
as the events that we’ve covered generate extreme price movement and opportunities. These are the famous “three-tailed” or three standard deviation
events that can destroy model traders who don’t have strong risk management programs. To the uneducated, they seem to appear out of nowhere to
disrupt trading.
after President Bush mentioned cellulosic ethanol in his State of the Union
address in 2006. At first, everyone thought he just mispronounced something
about energy. Figure C.1 shows the jump in price and the sustained upward
movement for this ethanol producer. This seemed to be a total surprise until
one considered the desire by politicians to reduce the U.S. dependence on
foreign oil and the impact of hurricanes on oil and gas production. What
and be ready to take advantage of these events should they start to appear.
Of course, no new event will be exactly the same as the previous event, nor
will the exact timing be the same. This means that the trader needs to be
flexible and creative in figuring out what area will be impacted and when.
This book is somewhat the antithesis of program or model trading.
World event trading (WET) requires an intimate knowledge of numbers and
statistics, but not as the sole determinant for making money. This is more
nuanced, more difficult, and more exciting. The results can be spectacular,
as the events that we’ve covered generate extreme price movement and opportunities. These are the famous “three-tailed” or three standard deviation
events that can destroy model traders who don’t have strong risk management programs. To the uneducated, they seem to appear out of nowhere to
disrupt trading.
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