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brownsfan019

Trading the Grains - Soy, Corn, Wheat

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  ochie said:
One source is the USDA Crop Report Page.

 

Thanks for the link. I am still trying to figure out which report it was that had the information which caused the huge drop. :confused:

 

I just want to make sure I am aware of what reports have the potential to cause significant moves in the grains so that I can be aware of the days that they are released.

 

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Yep, I hear you. Not all that clear. I would look for "Grain Stocks" listed here at 8:30. If I open the txt doc (there's also a pdf and zip) I see:

 

Corn Stocks Up 9 Percent from December 2008

Soybean Stocks Up 3 Percent

All Wheat Stocks Up 24 Percent

 

I guess Corn Stocks up 9 Percent (greater supply) caused the selloff?

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Yep - the farmers have been too successful, the analysts expectations too low. Watch all the reports for those people who knew it would happen. I hope they put their money where their mouth is.

 

It cost me a little (a lot ) as I had been building a position - buying and selling and staying long, based on the price action which is what I follow more than the fundamentals.

I am now out, and looking to see what happens now. (it can continue to plummet - look at Oct 08, Jul 09)

Would I do it again - yes. For the moves I was hoping for - and have received in other instruments.

It just shows the importance of not having a position, that while it hurts (doesnt every loss?) it does not mean you are ruined.....or even so badly hurt that its tough to recover.

Also shows the importance of correlation and portfolio concentration - look at wheat, rice, soybeans etc; (maybe not as relevant for day traders here, but still important to keep in mind for those who are not)

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buy corn because it can't go much lower. unlike stocks a deliverable commodity will not go to zero - the farmer has fixed costs and will not sell his product for less than it cost to bring it to market.

 

corn can only go so low.

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  enochbenjamin said:
buy corn because it can't go much lower. unlike stocks a deliverable commodity will not go to zero - the farmer has fixed costs and will not sell his product for less than it cost to bring it to market.

 

corn can only go so low.

 

 

sure corn price will not go to zero,

but an account balance can.

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  enochbenjamin said:
I have a book which I will dig up and post the title (even though its out of print) that basically instructs you to buy corn or any grain that is near a x time low. then double up every 50¢ it drops. You can't lose.

 

I understand the idea behind this, but would be interested to see the full instruction on how to do it.

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  Tams said:
sure corn price will not go to zero,

but an account balance can.

 

The math is easy to determine how low you can go. Buy now and double up every 50 cents it goes down. 2001 was the last time corn traded below $2. If you can afford a $2 drop in corn then the math says you can't lose buying corn and by doubling your position every 50 cent decline you will be profitable even if prices do not recover to current levels.

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Yes - doubling up will always work if your account is big enough. It will work at the casino too if you have more money than the casino and they let you do it.

 

however its also insane.

How long will you have to run the position - doesn't it then mean you are using capital that could be better utilised elsewhere.

 

In the market wizards books there was someone reminding us of a sugar trade.

 

its at all time lows of 6cents. how much lower can it go!

Well 3 cents - a 50% fall.

And I bet the people who bought all the way down, either - went broke, cut it at the bottom, or cut it as soon as they made a small amount of money.

 

Run your x time low on a test of any commodity from 2008.....good luck.

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  enochbenjamin said:
the farmer has fixed costs and will not sell his product for less than it cost to bring it to market.

 

That might fly in a freshman economics 101 course, but it won't last an hour on a working farm.

 

A farmer does have fixed costs.

 

A farmer will at times have no choice but to sell below cost, and all farmers would have the financial statements to prove it to be so. Recovering some capital is better than a loss of all capital.

 

Ask any farmer who hedges if he has ever hedged to lock in a loss so as to avoid a much larger loss rather than to lock in profits.

 

Corn may not go to zero, but it sure feels like it has at times. Ask any farmer, he'll tell you.

 

Best Wishes,

 

Thales

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  enochbenjamin said:
I have a book which I will dig up and post the title (even though its out of print) that basically instructs you to buy corn or any grain that is near a x time low. then double up every 50¢ it drops. You can't lose.

 

Fantastic! I'm all over that. Martingale for the win.

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  Dinerotrader said:
Wow, my first experience with a limit day. I wish I had kept my shorts from yesterday.:)

I can't imagine the feeling of those stuck on the long side of todays move. I am very curious to see how the movement is tomorrow.

 

attachment.php?attachmentid=17623&stc=1&d=1263317166

 

If youre using a smaller timeframe i.e. tick, range or vol chart, would you ever experience this limit day problem?

 

Also, can someone please explain this limit issue for dummies like me?

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My friend traded his forex account (sim) up to nearly $500,000. When I asked him how he did it, he just shrugged and said he never exited a trade at a loss. He just waited for the price to come back. "It always does," he said. A few weeks later I asked him how he was doing, and he said he quit. When I asked why, he said he just got bored. lol... Oh yeah, he finally let on that he blew up his sim account, too. "But that was just because he got tired of waiting for the price to come back.." I swear, this is a true story.

 

I think the grains are a great market to day trade. Thanks to Brownsfan for starting this thread. The initial points he made are still true. In my trade group, we like trading a 6 tick momentum range bar with wheat futures. We start a couple minutes after the market opens and we trade for just two winners and then we're done for the session. We also have a tight cutoff time, 11 am cst. In other words, we could trade for a few minutes on up to 90 minutes tops. It requires discipline and sometimes, due to the market's velocity, expert execution at times. This strategy has been very consistent and profitable if using responsible money mgt. Our system takes advantage of the price momentum with very concise setups, and measured trade profiles that are tuned to the current market condition at the time of the setup. We typically exit one position at a fixed target and the other, we trail with a very specific trailing stop technique. The dynamic stop reduces risk and seeks to get to a risk free position quickly and aggressively. Works great!

 

I particularly like Brownsfan's points about it being uncorrelated and that it heats up after we are often finished with our other earlier markets. It's great for the trader who has 'more trade in him' than his primary market might have in it, which might lead him to over trade and give back his hard earned gains. With a market like Wheat for example, you can approach it with a completely separate tradeplan, uninfluenced by the results of your earlier eMini trading. Gives strength in diversity when approached in such a way.

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Hi all I'm demo trading a soybean strategy at the moment (my experience so far is in trading forex). I am using an Alpari UK demo account for this purpose. I sold ZS.Q1 at 1379 with SL at 1382.25 at 11:05 CET, 21/7/11. My 1382.25 SL triggered at 11:10, 21/7/11 despite price only reaching a high of 1379.5.

 

My question for the more experienced soybean traders is is this sort of fill very common? Is it massively worse/better with different dealers? As you can imagine I was a bit alarmed to lose 11 ticks more than I thought I should have. Any comments would be very much appreciated, thanks.

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  iwshares said:
Hi all I'm demo trading a soybean strategy at the moment (my experience so far is in trading forex). I am using an Alpari UK demo account for this purpose. I sold ZS.Q1 at 1379 with SL at 1382.25 at 11:05 CET, 21/7/11. My 1382.25 SL triggered at 11:10, 21/7/11 despite price only reaching a high of 1379.5.

 

My question for the more experienced soybean traders is is this sort of fill very common? Is it massively worse/better with different dealers? As you can imagine I was a bit alarmed to lose 11 ticks more than I thought I should have. Any comments would be very much appreciated, thanks.

 

You need a futures broker to trade grains. That slippage is unacceptable and you will be broke very fast trading grains with that (almost 3 points) kind of slippage. Stop now before it's too late. The one thing you have to keep in mind with grains is that a news event will cause some significant gaps - so something like a flood being reported in the midwest can cause significant gaps.

 

Secondly, if this is your first foray into commodities after trading forex you sure picked a doozie! Corn is a little more liquid and moves a little slower - I would start there until you get a feel for grains as they are a very different beast from fx.

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  iwshares said:
Hi all I'm demo trading a soybean strategy at the moment (my experience so far is in trading forex). I am using an Alpari UK demo account for this purpose. I sold ZS.Q1 at 1379 with SL at 1382.25 at 11:05 CET, 21/7/11. My 1382.25 SL triggered at 11:10, 21/7/11 despite price only reaching a high of 1379.5.

 

My question for the more experienced soybean traders is is this sort of fill very common? Is it massively worse/better with different dealers? As you can imagine I was a bit alarmed to lose 11 ticks more than I thought I should have. Any comments would be very much appreciated, thanks.

 

In my experience, demo account fills experience this nonsense all the time.

 

In a real account, I hardly ever get more than a quarter cent slippage while trading the ZS contract. My brokerage is a Chicago-based firm and I trade through the Ninja Trader platform.

 

Incidently, you should probably be trading the November contract at this point. The August contract is too thin.

 

 

Luv,

Phantom

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BEAN OIL:

 

Funny I should notice this thread as Ive been trying to get short bean oil over the last few days as a position trade.

 

You get some crazy opening spikes, and the overnight action is pretty crazy too (much to my detriment) - stop running extravaganza! I can see why it would be ideal for day traders - especially those who like the russell 2k Bean Oil is like ER on crystal meth! and at $6 a tick it may not be so damaging to the pocket book.

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  TheDude said:
BEAN OIL:

 

Funny I should notice this thread as Ive been trying to get short bean oil over the last few days as a position trade.

 

You get some crazy opening spikes, and the overnight action is pretty crazy too (much to my detriment) - stop running extravaganza! I can see why it would be ideal for day traders - especially those who like the russell 2k Bean Oil is like ER on crystal meth! and at $6 a tick it may not be so damaging to the pocket book.

 

I have to chuckle.... bean oil moves like lightning and those $6 ticks can add up real fast! I blew out an account trading bean oil - not for the faint of heart. If you've got brass balls and deep pockets, have fun!

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Hi there,

 

This is a great thread.

Does anyone here have the iq DTN symbols for Soy, Wheat, Corn etc,

it just saves me looking them out as I am not familiar with grains

 

many thanks

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