Corn futures were the only grain that remained free for placing buy and sell orders throughout the day session today. Movements were very good and demonstrated the clean chart patterns that I discussed in my earlier post today.
Trading and Changing Dynamically
Traders must always remain adaptable and able to change to new circumstances. Phantom, in his book, says that a key skill for traders is to be capable of "behavior modification". Sounds simple, but its not! It is perhaps the most difficult aspect of this business!
We must be flexible and willing to change at all times. This is partly what I am referring to when I speak of trading dynamically. We must always change and adapt with the times! The markets are constantly changing like the ebb and flow of the tides in the ocean. This is one reason why black box trading methods eventually always fail. They are fixed -- static -- rather than dynamic. Something dynamic is something that is constantly shifting, adjusting, moving, and improving. If we are to survive on the seas, we much change and adapt with the markets! Right now, the stock market indexes are functioning in a vastly different manner than they were one year ago. Have our trading methods changed dynamically to fit them?
I know soooo many traders that trade only the stock index futures. They always trade the Russell 2000 or the S&P 500 futures -- no matter how bad the charts look, no matter how tight the trading range that the index is following, and no matter how much money they lose! Can you spell "stupid"?
I trade primarily soybeans. I trade other instruments (currency futures, gold, stock indexes, treasuries, etc.), but I mostly trade soybeans because the charts look clean to me, they are liquid, I can get good executions, they trade slowly enough that I can get in and out with accuracy, etc. I will probably continue to trade soybeans for some time to come. However, when circumstances change, I must also change. I will trade whatever instrument works well for me and has good-looking charts. (I know, I must be a raving lunatic to refer to a candlestick chart as "good-looking".) When the charts don't look right to me, I change to another trading instrument that does look right.
To continue to trade the same instrument regardless of how the tides in the financial markets shift, invites financial disaster. I'm in this business to make a living, so I can't afford the financial disaster of rigid, "static" trading. Go ahead and dig in your heels. I'll change when circumstances warrant!
Trading and Changing Dynamically
Traders must always remain adaptable and able to change to new circumstances. Phantom, in his book, says that a key skill for traders is to be capable of "behavior modification". Sounds simple, but its not! It is perhaps the most difficult aspect of this business!
We must be flexible and willing to change at all times. This is partly what I am referring to when I speak of trading dynamically. We must always change and adapt with the times! The markets are constantly changing like the ebb and flow of the tides in the ocean. This is one reason why black box trading methods eventually always fail. They are fixed -- static -- rather than dynamic. Something dynamic is something that is constantly shifting, adjusting, moving, and improving. If we are to survive on the seas, we much change and adapt with the markets! Right now, the stock market indexes are functioning in a vastly different manner than they were one year ago. Have our trading methods changed dynamically to fit them?
I know soooo many traders that trade only the stock index futures. They always trade the Russell 2000 or the S&P 500 futures -- no matter how bad the charts look, no matter how tight the trading range that the index is following, and no matter how much money they lose! Can you spell "stupid"?
I trade primarily soybeans. I trade other instruments (currency futures, gold, stock indexes, treasuries, etc.), but I mostly trade soybeans because the charts look clean to me, they are liquid, I can get good executions, they trade slowly enough that I can get in and out with accuracy, etc. I will probably continue to trade soybeans for some time to come. However, when circumstances change, I must also change. I will trade whatever instrument works well for me and has good-looking charts. (I know, I must be a raving lunatic to refer to a candlestick chart as "good-looking".) When the charts don't look right to me, I change to another trading instrument that does look right.
To continue to trade the same instrument regardless of how the tides in the financial markets shift, invites financial disaster. I'm in this business to make a living, so I can't afford the financial disaster of rigid, "static" trading. Go ahead and dig in your heels. I'll change when circumstances warrant!
Back to Corn
Although corn prices are the least volatile of the grains, perhaps todays price action shows a slight shift. I does for me, at least. Corn has a tighter lock limit because is shows less volatility, but it also has a significantly lower margin. But for me, the recent change from a lock limit of 20 cents to 30 cents opens a new vista in corn trading. Here's why:
A trader who might trade a single soybean or wheat contract could probably make about the same amount of money trading two corn contracts instead. The margin per contract for corn ($2025) is less than half that of either soybeans ($4388) or wheat ($6075). (These margins are stated as of 3/29/08 with my broker, RJ Obrien.) Furthermore, since corn futures have greater liquidity and sustain much tighter spreads during the evening trading hours (than soybeans or wheat), they can be traded at all hours. This is the best of all worlds, and it is only now becoming possible because of the wider lock limits that were implemented by the CME within the past few days.
Welcome to the world of trading corn futures!
