July Hog vs Bellies spread

bgold

Established member
532 5
Buy Jul04 Lean Hogs & Sell Jul04 Pork Bellies has historiocally been a good seasonal trade between endApril and end June (MRCI: 27Apr-22June). Profitable 14 out of 15yrs. Avg profit on winning trades: 4.5pts and optimised stop should be at $2000 (eg 5pts), not for the faint hearted.

This spread which bottomed end March at -3900 (-39cts) has recovered to -3000.

Any T2Winners with insight on this trade?
 

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BBB

Experienced member
1,071 3
Im really pi$$ed. I ordered that spread book about 3 weeks ago now and it still hasn't arrived!

As for the trade, as you say - not for the faint hearted! I don't think it would be right to comment though until I've gemmed up a bit more.

I was reading somewhere to treat MRCI with caution. Although their research is tip top, their trade ideas fall short. Could have been the Bellies thread.

Bgold - whats the verdict anyway? Smith or Ross?
 

bgold

Established member
532 5
Still haven't read them. Spent easter break looking after/having fun with my girls (wive + 3 daugther 7,5 & 2)
But I would suggest to get them both! They seem to be a good investment. The extra cost is just 1pt on 1 ES contract or a Wheat spread trade.... :)

I think MRCI should be used as research providing ideas but entry , target and stops need to be divised by the speculator. I think it is also helps as reminder before putting on a trade based on TA whether seasonality provides head or tail wind. I am afraid I speak out of experience.
good luck
 

JonnyT

Senior member
2,560 22
I bought the Smith and Howard Abell books. They were on long delays here so I imported from the States via Amazon.com and received them in 6 days!!!

The MRCI trade forecasts made around 1% last year ignoring slippage and costs so were net losers.

JonnyT
 

bgold

Established member
532 5
I also used Amazon.com and did indeed receive them within 2 weeks. MRCI is based on optimised entry and exit dates of past 15 yrs data. Obviously each year is different and therefore I think timing should be taken with a bucket full of salt. The identified trends, however, seem to be worth keeping an eye on.

Take fe the hogvs bellies trade: it bottomed a month ago. No doubt there would have been some excellent entries in past 4 weeks. It ain't no guarantee but looking at the seasonal chart, it would have looked very appealing to put this one on before the recommended date of 27Apr.

Let's see how this one is going the work out.
 

JonnyT

Senior member
2,560 22
I agree worth looking at but you should look at their suggestions and produce your owning timing rather than a rigid date that has been over optimised and not worth the paper it's written on.

Add in some money management and you may have a good strategy.

However I still think that going naked is perhaps a better strategy!

JonnyT
 

BBB

Experienced member
1,071 3
Interesting thread as usual bgold.

A lot of the stuff Ive done on spreads so far is just looking at the line chart of the spread and looking for entry and exit points. I haven't really looked at the fundamental aspects of spreads yet, although I appreciate this is fundamental (groan - bad pun). It would seem that basic TA stuff works just as well on a spread chart. As they tend to trend well, I'm thinking entering as the spread takes new highs/lows after a reversal or base pattern. Works well in hindsight, but what doesn't!

Hopefully, this could work well when there are technical and fundamental reasons - like the lean-bellies trade.

As for the book, I ordered it over 2 weeks ago from Global Investor! Looks like that was a bad trade then!! Id never used them before - so I thought Id give it a punt. Never again! Thinking of cancelling and ordering from Amazon.
 

FTSE Beater

Experienced member
1,518 5
bgold said:
I think MRCI should be used as research providing ideas but entry , target and stops need to be divised by the speculator. I think it is also helps as reminder before putting on a trade based on TA whether seasonality provides head or tail wind. I am afraid I speak out of experience.
good luck
Hi BGold

I couldn't agree more :)

Remember that MRCI doesn't just to the optimum entry and exit days, but also the spreads that are running the same way as past years. I have had more success with these, than the "optimum" entry date based trades.
The optimum trade time also means that your holding for sometimes well over a month, which is a bit long for me :rolleyes:

With regards the spread trade. My only worry is the liquidity in the Pork Bellies. Have you had any liquidity problems in the past?

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Hi BBB

Hopefully, this could work well when there are technical and fundamental reasons - like the lean-bellies trade.
IMHO the best thing to do is use MRCI to find the fundamentals and then use basic TA to take the trade and manage it. This is the way Joe Ross showed me and so far so good :)

HTH
 

BBB

Experienced member
1,071 3
Thanks FTSEB. Seems a good common sense method. When would you suggest placing the trade given that there is support from the technicals & fundamentals? At the open, close, or as soon as the trigger is hit during the day?
 

FTSE Beater

Experienced member
1,518 5
Hi BBB

Now that is the $64,000 question - Depending on the number of contracts :cheesy:

It's a tough choice. I won't trade as soon as it opens or just before it closes, as the pros will be moving the individual prices around.

The problem with trading during the day is that the daily range of a spread can be very wide. My way of doing it is to have the direction in mind at the start of the day and get in at a good price. What you term as a good price is a very personal thing.

Remember: On average a fill takes about 30 minutes if not more, so it's not an exact science and as you'll be holding for a longish time, then the exact entry becomes less important

HTH
 

JonnyT

Senior member
2,560 22
FTSE,

I don't know what broker you are using then!!!

There are some here that reckon they can fill in less than 1 minute on the open outcry markets using hand held terminals linked to an electronic trading platform.

Which broker are you using?

Thanks

JonnyT
 

BBB

Experienced member
1,071 3
Surely the risk of a bad fill can be reduced using Limit orders - or maybe stop with limit orders?

This assumes you give the the order as a spread order rather than legging in. This way you dont care about the leg fills, as long as the spread is still within your target?

As for the execution time, I've heard that we're better off phoning the orders in rather than using an e-platform. Don't know if this is true.
 

Moneycat

Member
75 0
FTSE Beater said:
Remember: On average a fill takes about 30 minutes if not more, so it's not an exact science and as you'll be holding for a longish time, then the exact entry becomes less important

I have checked my broker's fills using time and sales: usually market orders are filled between 45 and 90 seconds from the order.

As of reporting the fill itself I have noticed it takes a lot less for stop or limit orders, just a few minutes needed, whereas market orders fills might be reported well over 15 minutes.
 

BBB

Experienced member
1,071 3
May be we are trading on different exchanges here?

I assume we are talking CME and CBOT.

Of course, the broker will be the main factor.

Odd that market orders are taking the longest - as they have the higher priority.
 

Moneycat

Member
75 0
BBB said:
May be we are trading on different exchanges here?

I assume we are talking CME and CBOT.

Of course, the broker will be the main factor.

Odd that market orders are taking the longest - as they have the higher priority.

1. I trade CBOT grains.

2. Market order take the longest to be reported, not filled. What is slow is the fill's report way back from the floor.
 
 
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