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Trading in an arena such as this (livestock) is actually less risky than
trading what most of us trade, the indices. The fills in the cme livestock
pits are very good, except PB (pork bellies) and the trading is very active,
even in outmonths.
A good way to trade this type of future, if not experienced, is to consider
spread trading. One is more likely to be successful in starting with this
type of trading than non-hedged trading. Using the guidance of a seasonal
research, one can find highly successful trades that may not be as sexy as
doing discretionary or system trading of the spoos or minis, but may allow
you to keep your account in the black long enough to learn the ropes as well
as gradually learn discretionary methods. A good resource is MRCI, Moore
Research Center, in Oregon. (No affiliation or connection, except as a
customer). http://www.mrci.com/ I was told by a highly successful trader
that started as a spread trader and has used Moore for years, that I should
look upon the research and trades they recommend as a system to follow. The
difference is that Moore does the research rather than me (which is
appealing after spending over a year developing a system for emini trading).
Good luck,
Don
----- Original Message -----
From: "Robin Cotten" <rcotten@xxxxxxxxxxxx>
To: "Omega List (E-mail)" <omega-list@xxxxxxxxxx>
Sent: Wednesday, November 28, 2001 11:49 AM
Subject: smithfield and pork futures
1. You can't depend on using just 1 live hog future. You need M to
represent the summer highs and you need Z to represent the fall lows.
This year the drop was 40% and this isn't uncommon at all. So at a
minimum, average the 2 months together.
2. While most houses need futures at 5400 to breakeven, Smithfield's
break even is probably more like 5000.
3. This all assumes that corn is around today's prices.
Good luck,
Robin
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