Chicago Grain © ALL RIGHTS RESERVED. 


 

The risk of loss in trading futures and options can be substantial, therefore only genuine "risk" funds should be used in such trading. Futures and options may not be a suitable investment for all individuals and individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position.

All information, communications, publications, and reports, including this specific material, used and distributed by HighGround Trading LLC ("HTG") shall be construed as a solicitation for entering into a derivatives transaction. HTG does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.
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OUR TRADING PHILOSOPHY


Have you been curious about trading in the commodity futures markets? Many people are fascinated by futures – commodities are the goods and materials that create the foundations of our economy and way of life.


Agricultural futures are a good place to start. The leverage they provide for traders and hedgers is both accessible and robust.


No one knows for certain what direction the market may trade. If they did, markets wouldn’t exist, and some of us would be sitting on a Caribbean island with a refreshing beverage in hand.


In our opinion, the key to trading the markets is to follow trends by understanding three vital analytics – Technical,Seasonal, and Fundamental. There are times that all three are in agreement, can overlap or can point in different directions. No single analytic is the one answer.


We will give a quick explanation of each, from our perspective. 


TECHNICAL:

Charting the movement of a commodity can be fun. However, it can also be time consuming and confusing. Sometimes it’s possible to manipulate a chart enough to prove a trading hypothesis. Ultimately though, the Market is always right. We like looking at daily and weekly charts. These charts can usually identify a trend (or lack thereof) and provide some entry and exit points to any given commodity. Most trading or quote systems allow for chart studies using indicators. Bollinger Bands, 60 or 200 day moving averages, Fibonacci retracements, parabolic, and relative strength indices can provide insight into the movement of prices over time. 


     ● BOLLINGER BANDS: Named after famous technical trader, John Bollinger, these are plotted two standard deviations from a moving average. Prices trading near to the upper band might be considered ‘overbought’. Prices trading near to the lower band might be considered ‘oversold’. These bands can indicate areas of strong support and resistance.












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     ● MOVING AVERAGES: Moving averages are trend following indicators that are determined by price history. They can be used to indicate trends, support, and resistance in prices over time.


     ● PARABOLIC: Parabolic can determine good entry and exit points by using stop and reversal calculations. If a future is trading above a parabolic - stay long. If trading below, sell.


     ● RELATIVE STRENGTH INDEX: This is a momentum indicator. It compares magnitude in gains and losses over time. This should be used in conjunction with other indicators. 


SEASONALS:

Grain markets tend to rise and fall during the same time periods of the year. Government reports can create peaks and valleys, month after month, year after year.


We like using historic data, provided by a research firm that tracks patterns, trends and histories.


We also like to remember that there are basic pieces of wisdom that traders in the market remember.

-- Sell rallies in soybeans before farmers put the crop in the ground.

-- After it’s in the ground, buy breaks.

-- The market may top out right around the 4th of July

-- Harvest pressure can present a wonderful opportunity to go short. We believe the key to seasonal trading is to remember that it’s the trading pattern that matters, not historic prices.


Producers may be pressured to sell old crop supplies for a variety of reasons:

● If they are approaching harvest and need room to store the new crop.

● If they need to pay for a new crop season seed and chemicals

● If they have taxes or other expenses -- usually at the same time each year


End Users may be inclined to buy if prices appear to be bottoming out and they want to lock in better prices.


We like it when technical indicators and seasonal indicators seem to point in the same direction.


FUNDAMENTALS:

It’s as basic as supply and demand.


In the grains and soybeans it could be a very large or very small carryout that is revealed during a monthly report.


In the livestock, it could be heavier weights, fewer head on feed, or even a freezer report.


The Government provides monthly reports that track crop production and supply & demand (WASDE). These reports can be big market movers at times and caution should be exhibited when trading. We do not advocate carrying futures through a report -- in fact, before reports short-covering or long liquidation may occur to reduce risk for funds or managed money traders.


Weekly export reports can indicate how much product the US has sold to foreign buyers.


For the grains any report that can represent projected yields for grains and soybeans, and planted/harvested acres for the same can be traded, but carefully. Options provide wonderful opportunities to clearly define your risk during a report day.



THE CHICAGO GRAIN DIFFERENCE!!


We work with farmers and cattlemen to trade the markets the way Joe Florence did when he worked as a professional floor trader. We work with individuals, on a one on one basis, to try and make money from the price movements -- whether they go up or down.


We do not take power of attorney over any account. We like to define our risk before we get into a trade and take our target profit when we see it.


We like working with clients who agree that it should not be necessary to incur a margin call in order to trade in the markets.


Primarily, our clients are the final decision makers. It’s their money and their account. We make recommendations, help our clientele fine tune their ideas, and curate their positions.


No one person knows where the market will be trading in the next moment, the key is to define your risk & profit target before you get into a trade. And make sure you are trading appropriately for the size of your account.


Trading in the futures for profit should be an enjoyable pastime, that doesn’t require anything but risk capital and a desire to succeed!


Join us!



DISCIPLINES OF TRADING


●  Define your risk before you get into the trade.


●  Size your trade appropriate to your available equity.


●  Have a profit target in mind and be ready to claim the prize!


●  The market is always right!


●  Don’t fight a big move. Step aside or join the move.


●  Use risk capital only!


●  Most traders don’t have rich daddies to run back to–money management is the key.




DISCLOSURES


HighGround Trading LLC (HTG) dba Chicago Grain is a registered Introducing Broker (IB) with the Commodity Futures Trading Commission (CFTC) and is a member of the National Futures Association (NFA). HTG makes no representations or warranties regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person. All material distributed by HTG, including this piece, shall be construed as a solicitation for entering into a derivatives transaction. This communication is intended for the sole use of the intended recipient. The risk of loss in futures or options can be substantial therefore only genuine risk funds should be used in such trading. Leverage can work for you, leading to larger gains, but may also work against you, leading to larger losses.