When Being Right is the Wrong Focus
Volatility has a lot of side effects on the mentality of a basis trader. Maybe the most dangerous is an aversion to being wrong – and when price, basis, and spreads change at breakneck speed there ...
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The Merchant's Secret
What are the keys to creating a successful practice as a grain merchandiser?
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Taking Control of Grain Merchandising
Market conditions may be out of a merchandiser's control, but steps can be made to tip the scales in their favor. I believe merchandising grain and being a price-neutral grain handler is one of the ...
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Watch Those Emotions: When Markets Get Weird, Get Calm.
Unmet expectations are the springboard for all kinds of human problems. When things don't go as expected, the likelihood of becoming irrational or having exaggerated emotions is high. What does this ...
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Focus Your Energy Where Your Margins Come From
The country elevator is in an enviable position to serve as a price neutral conduit for grain from producers to end users. In order for this to work, you must start by always being fully hedged. Once ...
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Basis Trading Starts with Balance
A good basis trader will spend an entire career refining his/her basis trading knowledge and skills. However, every principle of basis trading is contingent on working off of a balanced position ...
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5 Questions to Help You Manage Pre-Spreads
Why? Pre-spreading is about locking in spread structure that will support your merchandising plans. (e.g., if you plan to carry grain you need a carry spread structure). It’s best viewed as a ...
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The End of Decision-Making
We (human beings, that is) are strongly motivated by FOMO – Fear of Missing Out. Any decision we make before we are forced into deciding means foregoing additional opportunities, and that doesn’t ...
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The Basis Trader's Rules
I ran across this in my favorites folder the other day. I thought it a worthy reminder of how being successful in the grain elevator business is achieved by staying true to a few simple principles.
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