After my last trade, I shorted $3.5M worth of Fortescue yesterday. Unfortunately, China announced imminent easing measures after I placed my trade. Markets and commodities surged. This morning, I quickly cut my position. My total loss, including transaction fees, was about $153k.
This is the biggest risk of shorting commodities- Chinese stimulus news. I did not expect it so soon, but since it has happened, I just have to get over it and move on. Positive stimulus news flow seem likely over the next few months, so it might be time to stop shorting commodity stocks for now.
Overall, I do not regret this little adventure in shorting iron ore stocks this year, as it has been net positive. Trading has ups and downs, we have to take the bad with the good. It would have been much better if I was more cautious and did not make the trade yesterday. However, if I was cautious this whole year, I might not have made any trades at all this year.
Anyway, this news flow should be good news for many of you who have been holding Chinese stocks. Hope things are turning out great for you folks and trade safely!