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The Rapid Shifts In Seasonality in the Futures Markets

By September 11, 2020 Blog

Published by: Peter Karaverdian 

Wheat VS Corn Bear Spread   In this publishing I would like to share a  Wheat/ Corn Trade Bear Spread Idea I personally found with our ForteTrader Trend Follower Strategy. 

But first, how did we come up with these trade ideas, strategies, and or tactics? With the rapid shifts in the emerging markets, and weather to begin with, we see seasonal tendencies getting shorter and shorter in their overall historical records.   Y

ears ago when I began Spread Trading Futures Commodities, it was easy to go buy some algorithmic data for sale that said buy when this line does this, sell when this line does that.  I had a couple good years, “being lucky” doing that, but it only worked until it didn’t.  And what was changing these repeated events?   

Energy sector for example as we see has been a huge example.  Up until several years ago America was the largest net importer of oil.  Now these days because of all the fracking, which I have had first hand experience with my own eyes seeing this activity throughout the US when I was hauling to these oil fields, which by the way was a terrible nightmare of a sight, we are now net the largest exporter of crude oil. We now have shift in the market positions of who the export and importers are.  So let alone from the headlines which were drastically moving oil, at the simple tweet on a influencer, trading seasonality has gotten just as complicated as pinning a tail on the donkey blindfolded.   

With this said, since the beginning of 2020 as Covid 19 rolled around and made things even worse, I went back to my intraday trading ways, and leaned back into to nothing but technicals. Thus we started making cleaner opportunities in Futures Spread Trades, and use the seasonality as a confluence tool now.   Using our ForteTrader Trend Finder Strategy Method, which I call my, Bread and Butter strategy, we look for shorter to mid term swing trades on these spreads, with ZERO BIAS approach.  Meaning, if I am wrong I am wrong, and I reverse and go, or on to my next trade.   

Using these rules, helps again, keep the emotion off the trade, and helps me going where the large money is moving.  I do not care why they are moving, I just want a piece of their action.   

This way I do not have the need to keep on fundamental data, rather I just become part of the SIMPLE trading process.   On the following Image I am looking at a 4 hour time frame of December Wheat vs December Corn, We have been short this market since September 4th at a price of about 193’s.  We had a clean pullback to 188’s and it caught my attention to scale in another position here and see how far we can take this.  

Source: TradingView

I can use a smaller time frame like a one hour to fine tune my entry.  As long as I am in at a good price, I am taking the ride down  As we do look for confluence in the 10 year continuation chart below of this relative trade, we can see we are are atop of Term Structure.

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