How To Exploit the Movements of Grains with These 2 Trend-Following Strategies

by Andrea Unger

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In 2021, we saw an increase in the prices and volatility of the Grains sector markets.

In this video, we show you two strategies from our portfolio that have successfully exploited this increase.

They are both based on a trend-following approach and work on the Corn and Soybean futures.

Watch the video to learn more about their structures and their real performance in 2021!

Enjoy! 😎

Transcription

Hello everyone, and welcome to this brand-new video dedicated to the systems in our portfolio.

This week we’re going to be talking about two different markets belonging to the Grains sector: Soybean and Corn.

Okay, so let's get started! So today, I want to talk about the Grains sector, which, together with many other commodities, has moved significantly over this 2021. Nowadays, we can see a lot of inflation in the markets, and this is partly due to the fact that there has been a considerable increase in the prices of these raw materials.

But let’s move on to the two strategies that I want to show you in this video. They’re both based on a trend-following approach and succeeded in taking advantage of the huge movements that have characterized the Soybean and Corn markets this year.

The first one I’ll show you is the one for Corn, the future on Corn. This is generally a tough market to trade, and this is mainly due to the low average volatility levels that characterize it. However, during this year, there was an increase in the volatility of this market, which made it easier to trade it with trend-following strategies such as the one I'm showing you, which opens positions when prices break through the high or the low of the current session. To calculate the high and the low of the current session, we use a time window because otherwise, in the first session, today's high and today's low would be the same level, and using such a strategy would obviously make little sense. So we wait some time after the beginning of the session, and then we place the orders upon the occurrence of the conditions and the filters based on patterns that we set up in the script.

The strategy worked pretty well this year, also thanks to the many movements of the market. This equity line shows its performance over the last 4 years, more or less. In this period, we had 200 trades, including long and short trades, because this strategy works both on the long and the short sides.  

As you can see, the strategy went through some very flat periods, such as this one. However, thanks to the high volatility levels that have characterized the Corn market this year, it's been able to take advantage of the large movements and close some very good trades.

Let's move on to the next strategy that I want to show you, the one for Soybean. This is another trend-following strategy. This kind of commodity - and this sector in particular - responds very well to trend-following strategies because these commodities tend to follow the trends.

This strategy is also based on a breakout approach, but in this case, it opens the positions when the prices break through the high and the low of the previous session instead of the current one. So this type of strategy works very well on Soybean as well. Note that the positions are not opened precisely when the prices touch the high and the low of the previous session. In fact, we added an offset value to add to and subtract from these levels. So basically, we add a fixed number of points to the high and subtract the same number of points from the low of the previous day to be sure that the trend that is going on is strong enough.

But let's check out the strategy report. We see that 2021 didn't start well at all. The strategy went through a significant drawdown but then quickly recovered, closing the year on its highest equity levels.

The annual results have been excellent. We can see it here: around $23,000 with 100 trades. I remind you that here we are already considering the commissions and slippage costs to be paid on this market. Remember to always consider large values for these parameters to stay on the safe side.

And with that, our video is over! I'm sure you too can try to exploit the trends of the Grains markets with these strategies.

I also remind you that in the description of this video, we're going to leave you a link to a webinar made by the 4-time world trading champion Andrea Unger, who will explain to you, step-by-step, how to become able to build your own automated strategies autonomously.

And with that, goodbye everyone! Please stay safe and I will see you next time! Bye-bye!

Need More Help? Book Your FREE Strategy Session With Our Team Today!

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Andrea Unger

Andrea Unger here and I help retail traders to improve their trading, scientifically. I went from being a cog in the machine in a multinational company to the only 4-Time World Trading Champion in a little more than 10 years.

I've been a professional trader since 2001 and in 2008 I became World Champion using just 4 automated trading systems. 

In 2015 I founded Unger Academy, where I teach my method of developing effecting trading strategies: a scientific, replicable and universal method, based on numbers and statistics, not hunches, which led me and my students to become Champions again and again.

Now I'm here to help you learn how to develop your own strategies, autonomously. This channel will help you improve your trading, know the markets better, and apply the scientific method to financial markets.

Becoming a trader is harder than you think, but if you have passion, will, and sufficient capital, you'll learn how to code and develop effective strategies, manage risk, and diversify a portfolio of trading systems to greatly improve your chances of becoming successful.