Trade the what, not the why!

We spend a lot of time making analyses for the market. We look at supply, consumption, export, production, and forecasts and try to put them in a mix to determine the long-term trend. And we still think it's valuable to do this to have a long-term strategy. But the market showed that the long-term trend could be reached with a few side roads. And on these roads, there are gaps and bumps. So to get to where you are going, you need to look ahead, but don't forget to look down while you are on your journey to see what surprises you find on the road. 

It's a long explanation for those who are frustrated with the market. We have people who can't explain the quickly changing sentiments and the big differences in market prices with sometimes only a few days in between. They seem to be focusing on why markets are moving the way they are, and they forget to act on what is happening. But someone told us today, you should always trade the "what", not the "why". Because as soon as you figure out the why, it's too late. In other words, follow the trend, and if you do, the trend will be your friend.

It seems a strategy some can adapt to easier than others But those who can are flexible, and will move with the markets. We, therefore, advise all our partners just to be in the market as often as they can. Traders know this, and they will always try to sell and buy, even if the market moves up when they don't expect it, or down if they expected up. But producers and end users seem to play the markets a bit differently. Funny enough we see most buyers starting to buy when markets move up, and they tend to wait when markets drop. Producers have the tendency to do the opposite, they sell when markets drop, but when markets move up, they only sell low quantities or nothing at all.

Both end-user and producers would benefit more if they would stay active on the markets, even when markets move in a direction that would suggest it's better to wait a bit. Traders thrive when producers stop selling, it drives the end users in their direction, making them profit on earlier purchases (that they did when the end users refused to buy) or selling at high levels only to buy them back once the market comes of again. And because end users stop buying when markets drop, the producers have to turn to the traders again.

Of course traders offer a lot of additional services, we will be the last ones to say traders have no added value because they surely do. But we do feel that they have adopted the strategy "Trade the what! not the why!" best.

We will keep trying to inform you all about both the what and the why. The why we try to explain in our introduction, the what in our product sections. The next week we will be in Dubai, forgive us if our reporting will be a bit later as usual.