Don White, Chairman of White Commercial Corporation
What Are “Basis Eyes” and Why Are They So Important?
There are several different ways to say it, but at the core having basis eyes means
The Basis Trader's Rules
- We are in the grain business and we are basis traders.
- Futures are used only to fix the basis on a grain transaction and futures spreads are used only to connect purchases to sales or sales to purchases.
- Basis ultimately follows the market structure, thus we must develop the skills to trade the basis curve both up and down.
- Space and services have value ... we must not give away control of our space, services, or margins to others.
- Deal with all customers (buyers and sellers) in a manner that is fair for everyone involved.
- Have a plan with self-imposed limits.
- Cash is king - protect and grow working capital.
- Have a clear understanding of the numbers: Rid our minds of market noise and other distractions that are counterproductive to the mission (see rule #1)
- financials and accounting
- positions and exposure
- mechanics of basis trading
- Rid our minds of market noise and other distractions that are counterproductive to the mission (see Rule #1).
- Get involved and network with other disciplined basis traders.
- Selling is Everything!
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