I agree w/ spreadtrader, I've yet to see a flat price grains trader succeed consistently or over the long run. Also, is he really worth nailing for not telling you what exact spreads he is trading? I would research and translate the 'bland subterfuge' on your own, like anything else, screen time and watching the calendar strip hold the answers.
Corn- Sep is technically new crop, but a little too early due to northern harvest so Dec is the first non-bastard month. Winter Wheat- July is new crop Spring Wheat- Sep is new crop Soybeans- Nov is new crop With this in mind an old crop/new crop spread would be like: Winter Wheat- May10/Jul10, Jul10/Jul11, Sep10/Jul11, Dec10/Jul11,Mar10/Jul11 or Jul10/Sep11. So yes the spreads you described are old/crop new crop, but there are many different variations.
I worked briefly on the floor clerking in the bean option pit and rather enjoyed it. I was always curious as to what percent of the floor traders in the straight bean pit were just scalping or spreading. I was always curious about that. From my perspective it seemed like quite a few. Over 60% but I stand to be corrected. Any thoughts?
100% of locals use spreads, thats not to say 100% of their trades are spreads. That will vary from trader to trader, but anyone making markets for size will carry the majority of their position on a spread basis, probably 85-90%.
sometimes it just does not matter as one super duper FAT finger can wipe out a spec or cause huge slippage on a stop loss order went to the bathroom and came back looks like someone triggered a "huge" dumper in electronic wheat today "price discovery" indeed :eek:
I have traded grain futures since'83, mostly as a local / market maker. Whether you rely on fundamentals or technicals I think the most important aspect to trading futures is being able to leverage yourself properly. Even after all these years I still get frustrated by analyzing the market correctly but not leveraging myself properly. The result is losing money or exiting a trade too quickly. Having said that one of the most effective ways to leverage yourself is to trade spreads. The sequence of contracts are there for a reason, they are not arbitrary. Spreads usually reflect the fundamentals and offer an efffective way to leverage yourself because margin requirements are much less than outrights. Wheat index funds have found out the hard way how a spread can influence a position. Hope this helps a little. local.
Hello Local. I hope and i wish to be well. I want to please you, if it is possible to you and if you want of course, to answer me in the following Questions: 1) How Old are you ? 2) Why, with your opinion the MGEX (Minneapolis Grain Exchange) Soft Red Winter Wheat Index Futures Contracts, have an extremely low Volume and Wide Spreads Bid and Ask ? Kind Regards, George Kanellopoulos.