TFM Perspective 5-15-20


One Thing Will Happen

More than 30 years ago, I was in my first months as a market advisor. My boss took a few of us from West Bend, Wisconsin to Chicago to visit our company’s clearing firm and experience first-hand a trip to the trading floors at both the Chicago Board of Trade and Chicago Mercantile Exchange. The experience was forever etched in my memory. This was ground zero of the price discovery method as traders determined, in seconds, the process of establishing a market value to ever-changing supply and demand factors. Much has changed since then. Then again, not much has changed at all. The exchanges merged, and the hustle and bustle of trading floors has disappeared, replaced by electronic transactions. Price discovery, however, still occurs instantaneously, just in a different format. That is, fingers hit the ENTER key rather than a hand buy or sell signal to another pit broker.

Perhaps the most memorable recollection of that crisp fall day was a five-minute conversation of which I was more the recipient of advice than actual shared conversation. When visiting our clearing firm, the then vice president, a somewhat revered man (with wisdom and one who was feared at the same time) offered a few words that have stuck with me ever since. In a nutshell he said, “despite constantly changing news, weather, and other factors that determine price changes, one thing will happen, and that is, the markets will open tomorrow and will either go up or go down.” Well, as you might expect, there was a shared look amongst us as he walked away and went on with his day, apparently finished with extolling his decades of experience. As time passed, however, the power of his statement helped to form the cornerstone of my career in market advising, helping to ground myself and customers with a simple concept.

The markets will open tomorrow and either go up or go down. The significance of that simple sentence is the strength of its underlying meaning. Each day the markets will move. This means every day there is a new opportunity. Despite our biases or knowledge, the marketplace will, on a continuous basis, acknowledge new news, weather, politics and, well, you get the point. Bear markets at some point turn to bull markets, and bull markets turn to bear markets. It is a constantly changing world. In current times, the bearish reaction to covid-19 will run its course. At some point, the oil market will stop going down, despite every reason to believe there is “one more leg lower.”  Or, grain and livestock prices will find buyers regardless of bearish fundamentals, as they are considered good value and worth owning, despite a lack of positive news. The power of realizing that every day is a new day and that new analysis and perceptions will occur is key to recognizing that management of trade positions, grain in the bin, and livestock in the yard need to be measured.

It’s easy to be frustrated with low prices. Tomorrow, someone will buy, believing they are low enough, even if you don’t see the reason. In the weeks and months ahead, the markets will move. Be careful not to get stuck in your beliefs and biases.  The most successful trader accepts the fact that, despite how much they know, the markets can humble them in an instant. Tomorrow is a new day and new opportunity. Tomorrow, “one thing will happen.”

If you have questions or comments, contact Top Farmer at 1-800-TOP-FARMER extension 129. Ask for Bryan Doherty.

Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.


Bryan Doherty

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