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Grains Trading


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Grains Trading

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  #1 (permalink)
 
 
Posts: 1,176 since Nov 2009

I am looking at diversifying into commodities for swing trading, and I would be curious to know if there are any grain traders that would be willing to share their knowledge as to what type of research one would do in order to get accostumed with the factors that influence the grain markets; what makes the actual market participants tick; how one should view and track weather events, etc.

Basically what a new grain trader should learn about the grains futures market. Anyone that is willing to share their knowledge, or provide some guidance as to where one can find said information?, I would greatly appreciate it.

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  #2 (permalink)
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Absolute-Futures.com is big into grains and commodities.

Dan

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  #3 (permalink)
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When it comes to grains you have to follow the USDA (US Dept of Agriculture) reports as for the supply and demand, learn how weather affects the prices and follow the COT (commitment of traders) reports. Also, seasonality in physical commodities is a big factor. When I was learning physical commodities and their fluctuations, I have used the earlier versions of this book: NetPressOrders: Network Press - Subscription Center

One thing I could tell you about physical commodities is this:
1) They have LIMIT UP/DOWN moves where you can get caught on the wrong side with the inability to get out.
2) 2-3% take delivery, which means that at some point after prolonged moves up or down, there could be very strong corrections extending way beyond what technicals point out.
3) You still have to be technically savvy in reading price action as you do with all leveraged trading.

Here are some more resources:
Commitments of Traders - CFTC
United States Department of Agriculture - Agency Reports
Early Market News - With Duane Lowry ( one of the better price analysis for grains)

I hope this helps.

Matt

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sysot1t View Post
I am looking at diversifying into commodities for swing trading, and I would be curious to know if there are any grain traders that would be willing to share their knowledge as to what type of research one would do in order to get accostumed with the factors that influence the grain markets; what makes the actual market participants tick; how one should view and track weather events, etc.

Basically what a new grain trader should learn about the grains futures market. Anyone that is willing to share their knowledge, or provide some guidance as to where one can find said information?, I would greatly appreciate it.


As always, Matt has provided excellent advice.

I began trading grains at the Mid-America Commodity Exchange in the 70's and began and finished my career trading Beans at the CBOT. My words of advice are, begin with trading corn, then move "up" to beans, and stay away from wheat. I wouldn't bother with oil or meal ,either.

Feel free to IM me if you would like to discuss this topic in more detail.

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  #5 (permalink)
 
 
Posts: 1,176 since Nov 2009

Thank you so much for the information posted so far, I will review it all. I ordered last night a on my kindle David Bennett's "Day Trading Grain Futures" ... interesting read thus far.. it did mentioned corn had the most volume.. I started pulling up the historical data on TS8 to start understanding the market.. again, thanks and please keep posting anything else you can think of that can aid me...

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mattz View Post
1) They have LIMIT UP/DOWN moves where you can get caught on the wrong side with the inability to get out.

ok, this part freaked me out a bit... so if I took a position, and it moves 2 levels beyond the limit against me due to weather conditions or anything (war, etc) ... I could be stuck and my losses be really, really bad, if the market doesnt unlock for a week or so? I guess I have to run some analysis to understand that better and see what has been the frequency of the lock outs taking place.. that might be more risk than I am willing to tolerate..

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Forgot to mention, that the grains have very strong seasonal tendencies, due to obvious reasons.

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Don't be overly concerned with getting stuck in a limit move in corn, or beans. It's not like trading FCOJ during frost season. That's when you better be prepared to get caught locked limit.

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I wouldn't be overly concerned.... but it does happen. Corn was limit up 2 days in a row last month
I mostly swing trade CL and ES but mess around with corn and beans whenever I can. They are great to trade intraday.

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  #10 (permalink)
 
 
Posts: 1,176 since Nov 2009


I have been doing a lot of research lately on how to minimize the risk on long term trades of grain futures, and I came across spreads. I am very familiar with pairs trading in equities, and I am beginning to notice some similarities with spreads... but I am curious as to your guys(and gals) opinions on spreads for trading grains(or any other commodities) futures to minimize risk. Thoughts? Opinions?

I also started looking at doing options on futures, they seem to be another way to control risk... and by risk I mean loose more than what I have decided to risk on a trade...

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