@kinggyppo to answer your question from the other day regarding grains and ACD. A little of my background, then some methodology. I grew up on a corn/wheat/cotton farm in Texas. After high school I took a job as a farm manager and most of my responsibility revolved around trying to develop a marketing plan for corn and wheat that was non-existent up to that point for the operation. Timing was lucky as this was 2005 and prior the huge volatility that developed in the grains in the coming years. I did well and enjoyed it, and left after a few years to a cash grain trading firm, doing cash grain trading and developing futures / options risk management and delivery arbitrage models. Left after 3 years doing that for 2 companies to trade futures for my own account. Today, my wife and I trade our own account full time, as well as do risk management consultation / modeling in grains and fuel products (crude / rb / ho) for a growing independent grain and wholesale fuel merchandiser. We also own farmland in the area I grew up, and oversee the employees for that whole mess haha. How I approach grains: Grains are a lot slower but ACD still works. It probably works best in soybeans just due to the higher volatility. We mostly look at weekly and monthly values, and use intra-day levels as entry points. I also like to use Fisher's trend reversal trade, because grains still have the ability for a gap on days other than Sunday night In addition to this, we use some various ATR calculations, and obviously our old fundamental data using delivery equivalents / basis movement etc, but it all comes together, with ACD forming the core. As to the wheat trades from the other day; Fisher's TRT says that if you have a Aup level hit that is above the prior 2 days' A-down confirmations, then that is a trend reversal. In Z chicago wheat, that level was 504 the other day. The following day, it spiked higher, but fell back to 504 so we got out, scratching the trade. It closed @ 500. I mentioned then that 504 was a key level b/c so many A-levels were lining up there. In grains anyway, you won't get many C trades, but we use A levels like most use S/R levels, except the culmination of A levels isn't nearly as obvious as a double bottom, which is good. The day after we got out, wheat again was above 504, so we bought again. As it sits now, we are long from 509. We SHOULD also be long X beans, but already have exposure via X/X so I made the decision not to take straight flat price exposure as well. 20 points later, my wife is calling me "genius" with only a slight smirk haha
great thanks for sharing that, so can you explain why soybeans have higher vol. This is great information, there are others I am sure that find all of this very interesting even if they don't trade it. Also, do you do correlation analysis among grains, and/or do calendars within the single product. thanks.
I miss you guys. I'm sitting in the nicest public library in the world in London to catch up on my charts. I'll be back soon.... In the meantime, it would be helpful if everyone posted a nice little interesting tidbit of some interesting price action while I was away.
ES with a perfect failed monthly Adown on Friday. As far as oil goes, Sep/Oct selling off hard. Cushing is almost full so the people bidding this thing up two weeks ago are liquidating because they can't store. Some traders thinking we are going super contango w/ flat price hitting 3 handle. Dec/Dec with unusual strength along with flat price this morning. I'm not sure why flat price is getting bid, but could be the strength in China. Dec/Dec likely getting bid because front spread is selling off.
Alright, so consensus of two traders is that flat price is getting bid up as a result of the front spread selling off. Macro guys thinking they are front running refiners thinking they will be coming in soon to lock in this .65 cents. They both agree this rally is a sell
Yeah I'm sure flat price number line is still deeply negative. We're going into the 30's. Plus we still have a solid QTR A down in flat price to work with.