Day Trading Grain Futures ?
A practical guide to trading for a living
Day Trading Grain Futures is a practical book from experienced trader David Bennett, which provides you with everything you need to be able to day trade grain futures effectively.
Day traders like volatility and the grains have more than enough volatility to keep anyone happy. With the price per bushel moving anything from 20 to 60 cents in a session - and sometimes more - there is plenty of scope to profit, especially when you consider that each cent the price changes translates to a $50 profit or loss. This book shows you how to trade these volatile markets with good technique and a profitable day trading strategy.
The opening chapters begin with a breakdown of why people trade the grain contracts as opposed to the more popular stock index contracts. Bennett argues that as well as the opportunity for bigger profits, grain futures are often easier and more convenient to trade. For example, they have a set open at 9.30am (US Central Time) and close at 1.15pm (US Central Time), and the structure for David?s contracts are all the same at a point worth $50.
The author day trades for five reasons:
1. Instant gratification
2. Reduced risk
3. Steady profits
4. Less stress
5. What crisis?
Whilst it may seem from this list that there are no drawbacks to day trading, Bennett does highlight the expenditure involved, as the cost of a larger amount of smaller moves can swallow up your profit very quickly.
The book then examines whether trading is gambling, and Bennett argues that it is, as almost everything you do with your money is a gamble. However, he goes on to explain that it pays to gamble when the odds are in your favour, and you can put those odds in your favour by using an effective trading strategy ? ?the successful trader understands that sustaining losses is just part of the winning process?. He also describes the criteria with which he judges himself at the end of each trading month, including whether he has won at least half of his trades, ensured the average win is bigger than the average loss and also made sure that he has found a trade in at least 80% of available trading sessions. Using these points, Bennett continually improves his trading performance.
Bennett then explains exactly how he goes about trading, beginning with having the right set-up such as stop losses, an idea of how much to be bet, in terms of capital that is, and also what the margins are. As he goes on to explain, as soon as you enter a trade, your money is on the line so you need to take the proper precautions to make sure you don?t lose a lot more money than you bargained for.
Bennett then takes a look at the specific contracts that he trades ? soybeans, wheat and corn ? and explains these in more depth, from the contract codes through to price. He also explains his position as a speculative trader; gambling on whether a particular grain?s futures contract price will rise or fall in the course of a single trading session.
Chapters 8 and 9 examine charts, and in particular candlestick charts, and how these can map the price movement of the grain futures that you are interested in.
Chapters 11 and 12 then take a look at managing the trade, and begin to put into practise the trading strategy examined in the previous chapters. Bennett goes through slippage, when the price you get is different to the price you had hoped to get; initiating a trade, and then managing the trade with sell stops, or sell limits, or even a ?One Cancels All? order.
In Chapter 13, Bennett uses screen shots from his trading calculator to highlight exactly how he goes about putting his trades into practice. He goes through the price, limit, capital, margin and stop and profit targets, explaining how he works out each. He argues that ?this one tool allows me to quickly determine all the information required to properly implement my trading plan?and believe me, trying to do these calculations with pencil and paper when you are in the middle of an adrenalin-pumping session just does not work, and the consequences can be very expensive?.
Chapter 15 is a case study from Bennett?s own trading of soybeans to show exactly what the process looks like. This detailed section is effectively a fly on the wall view of his trades in action. This chapter is followed by an extended view of this trade in order to highlight the longer trading process.
The concluding chapters of the book explore the importance of practice and having the correct set-up. After all, where you would be if your internet connection went down in the middle of a trade, or your computer suddenly crashed? Bennett also highlights the importance of correctly logging out of your positions as ?it is distressing to log in the following day to find yourself in an unplanned trade that has notched up substantial losses?.
Bennett finishes the book by re-iterating that simplicity and routine are the keys to successful trading, and this concise and practical book shows just how this can be achieved.