c13 JWBT016-Busby October 9, 2008 9:19 Printer: TBD
136 STRATEGIES TO WIN
I am using the “Bigger Fool” approach. I learned this particular strategy
about three decades ago when I lived in Oklahoma City. The basis of the
strategy is simple: Buy a product at a high price, and there is always some-
one (a Bigger Fool) who will buy it from you at an even higher price. Of
course, the strategy works only in strong bullish markets like the current
one for corn. Obviously, if prices are falling, it may be difficult to find
a “Bigger Fool.”
Even when prices are high—especially when they are high—this strat-
egy tends to work well. Prices may seem unrealistically top heavy, but that
is the strength of the theory: prices are rising even though the increase may
be irrational. The Bigger Fool Theory is based on both reason and emotion.
In those early days in Oklahoma, it worked like a charm for me, and it has
also been working well in the current bull market for corn. I am making
money buying corn at very inflated prices—even at all-time highs. It may
seem outrageous to go long at the top, but in this market every day seems
to make a new high and my profits just keep rolling in. When I trade corn,
I trade corn futures.
A few years ago, I rarely traded corn. Generally, I would get into that
particular market only once a quarter. However, at the time of this writing,
I find myself trading corn almost daily. There are a couple of reasons for my
renewed love of the golden agriculture crop. First, the market is so bullish
that it is hard for a trader like me to pass up opportunities to trade it. Sec-
ond, new technologies make access so easy. No need to call the exchange.
Just use the computer and click the mouse. I use the Bigger Fool Theory
to trade corn futures at the CME Group. In addition to the Bigger Fool
Theory, I also have adapted my Face Peel trade (explained in Chapter 6)
to make money in corn.The Morning Face Peel
I typically trade corn futures between 5:00AMand 5:30AMcentral time.
The electronically traded corn futures open at 6:30PMand trade until
5:30AM.At5:30AM, when there is a halt in trading for three and a half hours.
Then trading resumes electronically, and the trading pits of the exchange
are also open for business. Both the electronic session and the open out-
cry pits close at 1:30PM. I take advantage of trading during the 30 minutes
before the morning trading break. This is generally an active time for corn
because traders who have been on the wrong side of the action through-
out the evening are exiting their positions or shifting sides before the open
outcry pits open.