Contract differentails in Corn futures and Sept vs July

Thank-you Stoic.

A well thought-out reply.

I am not yet trading corn. I started following it a few months ago and noticed that sometimes they are great moves (gaps) in the overnight.

I almost bought last Thursday at 610.50 on the May contract, well I did on the sim - hah, hah, and instead I went and traded ES (breaking about a gazillion of my rules and taking a big loss - I traded short on an upslash day -argh.)

So an example would be the first chart you posted with the clear uptrend and you would buy as it came to the trendline?

(attached just late night fun )

Quote from stoic:

Most of my trading is in daytrades. 99.9% of the time that I hold longer are in the spreads. Sometimes the spread has much lower margin requirements. Corn New crop vs. Old crop can be as low as $400.
What I look for are spreads that are way out of wack based od historical or seasonal. Sometimes the spread will show some action when the outright has no trend and a 1 cent move in the spread is 50 bucks per just as in the outright. Some may tout that spreads have lower risk, well... I think the lower margin well speak to that..theres still risk, another thing one can't place stops based on the spread. so there are pros and cons. I like it because most of the time I don't have to be right on the direction of the commodity, just right on the direction of the spread, and when things are way out of wack, they generally will move more to the mean.
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probably not you that was confused but me!

I made so many and then saved them and named them ... only posting the one I engineered into a signal - ha, ha.

Whatever the symbols are should be the unconfused answer!
I'll remake it again after a second coffee. (very late start this morning and still gathering data..) :)
 
updated and without dangerous labels!

(attachment is the graph included)

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recently I read somewhere that new corn crop(harvested early) can be used for delivery of september corn. there is even a seasonal trade going on (buying Z/U corn)
july corn is the last fully old crop corn of the previous season thus maybe subject to supply shortages/ squeezes
since you mention single contract, odds are great you are a bit underfunded. you should learn spread trading and enter multiple spread orders instead of a single outright. you can take partial profits on the way
 
iirc your charts show a spread of 3 september corn versus 2 july corn. general practice is equal number of contracts on different legs
unequal number of contracts brings directionality to your spread
 
Thank-you for your posts.

The above chart was only for fun. I did have equal ratios and then wanted to try the effect of unequal.

As I am new to corn I would not try to trade the above.

I was impressed by the depth of experience and knowledge that Stoic showed in his posts and I feel that contract spreads may be best left to the more experienced.

In spreads the delta of each contract will be different (and sometimes not even in the same direction.). With unequal deltas you would use unequal weightings to achieve directional neutrality - If directional neutrality was your objective for trading the spread.

Stoic is trading revision to the mean based on past years trading patterns (for his spread trading). This requires a database and experience and a belief in revision to the mean as a strategy.

As my trading style is based on speed lines, average daily ranges etc it is directed to a single contract.

I only day-trade and reducing my risk in not my objective.

Thanks again for sharing your thoughts.


Quote from etemtezcan:

iirc your charts show a spread of 3 september corn versus 2 july corn. general practice is equal number of contracts on different legs
unequal number of contracts brings directionality to your spread
More...
 
Today I checked in on my unequal spread as a signal line for the Sept corn.

When it broke 392 low support the signal line gave a sell. This happened May 3. On May 3 Sept corn was 537.50.

It is now (May 10) about 515.

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Here's the signal line earlier today and then at the close
(having some prb at Brachart)

The first shows the signal line coming to test a low, and the second shows it bouncing off that low. Perhaps something for day trading?

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