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Listen to “How to Trade the Grains’ Market” on Spreaker.

Hi, guys. Hi from Andrea Unger, and we want to talk today a little bit about grains—futures on grains.

These are interesting futures, and they allow you to develop interesting strategies, especially Soy Beans. Soy Beans is a market that is opened to different approaches really, you can develop trend-following, counter-trend, BIAS—it’s opened to many, many kinds of approach.

Interesting is also Corn for different reasons because Corn, as you can notice, it does not have a large dollar expansion during the day. The dollar volatility during the day is not that high. That means you can trade it with tighter stop losses; and, in this case obviously, it can be good for people who dedicate smaller capital to trading, simply because you can easily trade Corn with a stop loss of, let’s say, $400. And $400 measured on an account size of $20,000 has a smaller impact in percentage. So, you can actually adapt this to a risk profile that is not extremely aggressive. So, it’s good for that.

As said, Soy Beans is good for many kinds of approaches. Corn, it’s a little bit harder to find something that works. Normally, you’ll end up with medium-term trend-following strategies—which are fine. But consider that you might obviously have prolonged periods of drawdown in these types of strategies. So, if you’re fine with it, perfect; if you don’t feel comfortable with these kinds of strategies, consider that Corn might not be your first choice.

Wheat is a nice market, but believe—at least Andrea Unger, me—I did not find many edges on this market. It’s a market that moves in a, let’s say, bad way. I mean, I don’t say Wheat is guilty of my failures, but I believe it is not easy to find good trading systems to work on Wheat, at least I’m not able to do so. If you are able, perfect; send me the systems, I’ll put them to work. But it’s not the first market to concentrate if you start your adventure in the trading systems development environment because it’s not well responding to the most common movements that you might use.

Soybean Meal and Oil are 2 minor sectors, 2 minor markets, which are good for diversification. I don’t think they are really necessary to focus on. You already have enough here– Obviously, diversification is very, very important. I always say it’s the first thing to consider when you want to trade for a living, but not necessarily you have to look everywhere. So, these two markets are part of the family. They are liquid enough, even though they are much less liquid than these others, but they are not even the easiest to develop on. So, I would say if you look for something, look for systems on Soy Beans and, maybe, on Corn—trend following, medium-term, but consider that it’s not that easy. Better forget or keep, as a second choice, Wheat because it’s not the best market out there to develop systems on.

That’s it; that’s it on grains. Stay tuned. We go ahead with other markets soon, ciao.

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