c13 JWBT016-Busby October 9, 2008 9:19 Printer: TBD
Reaping Profits on the Farm 137The trade is simple to execute. I look to see if a trend is in place. Is the
market moving in an identifiable direction? If so, I identify that direction
and try to find the right entry price for a play. The average night move
for corn futures is about 12 cents (at least that is the case at the time of
this writing). If there has been a six-cent move from the Globex opening
price until that 5:00AMtime frame, I go in the direction of the move. If
there has been a six-cent move up, I buy. If there has been a six-cent move
down, I sell. In addition to looking for an identifiable trend, I also want
confirmation from the agricultural complex. That is, if I am going long, I
want to see soybeans and wheat going up, and if I am shorting corn, I want
to see those commodities going down. Soybean is the most traded of these
three products, so it should be moving in price in the same direction as
corn before you enter a position. I will ride the move for that 30-minute
time frame before the early-morning break.
The trading symbol for corn is C, and the futures contracts expire every
other month. You need a margin account to trade corn, and at this time the
good-faith deposit needed to trade a single corn contract is approximately
$3000. However, that sum may change from time to time, so it is always
necessary to check with your broker for exact requirements. Corn trades
in 0.0025 increments like the E-mini S&P futures contract; the value of each
tick is $12.50. Four ticks represent a penny of movement, and the value of
each penny of movement is $50. In other words, if you are accustomed to
trading the S&P E-mini futures, the point value is the same. Figure 13.1
charts corn as it breaks out of the opening trading range. On this particular
date, I bought at $616 and sold at $618.
As with all trading, exercise great caution. Watch the market before
trading. See how and when corn moves. Identify points of support and re-
sistance. Understand all of the risk involved. Only then will you be ready
to venture into this market.Review
During my trading career, I have traded various commodities. When a par-
ticular product starts making the news because supplies are short and de-
mand is high, prices will normally begin moving up. I say “normal” because
the supply/demand equation will push prices up unless there is some gov-
ernmental involvement. When a particular market is ripe for profits, I will
probably be trading it. I have traded beef, pork, pork bellies, corn, wheat,
and soybeans. I do not trade these commodities every day, but there are
times when I shift my attention there and make money.