Day Trading Grains Futures
By geosingThis is my attempt to forward test David Bennett’s methodology which he shares in his book – “Day Trading Grain Futures” (ISBN: 978-1905641932). I use a modified version of this in my trading. This is just to document the profitability or lack thereof of the method, as detailed by David – as close to a purely mechanical and simple methodology as I have seen. I am also trying to teach someone to trade. This trader will be using this method to trade corn and OR Breakout scalps in ES, YM or NQ from Mr. Chan’s arsenal of tools.
I am taking a medical break from trading so real time posting may not be possible and is not necessary for this project. I may not even be able to update it on a daily basis, but I will try my best to do so.
Although traders trade numbers, I like trading a real commodity, although I do not plan on unloading bushels of corn any time soon on to my driveway.
I didn’t know this got live till today. However I have been told to restrict some or all of my trading activities. So depending on how I interpret those orders, I may post like crazy (since I will lose trading privileges) or not at all (because I lost the trading privileges). Just like this schizo market, I will have to take it one day at a time. Take the time to smell the flowers; you can take absolutely nothing with you, when you depart.
Hi Geosing, thanks for starting this thread. I read Bennett’s book and I am interested to see how his method plays out in real live trading.
Do you follow his 2 min opening candle breakout method, or have you developed something else to get you into your trades?
When trading Bennett setups, I strictly went by his scheme, using 2 minute charts only, but I restricted the trading only to corn. Despite my intentions, I am unable to follow through, as I trade very little these days. I hope to do what I intended to do, once I am able to.
Got kicked out of YM and 6E trades this a.m.. So switched to March corn. Took the Bennett set-up. Bar 2 was an inside bar, defining Bar 1 range as the breakout range. While waiting, observed resistance at R1, when making ORH. Bar 9 broke the range and stopped in at 599. After taking a quick 3 cent profit to ring register, I am still in the trade. Looks like a R1 to S1 move.
Covered all at S1 – 591. Since I can watch the market, I do not follow Bennett’s profit targets. Instead I take profit at pivot levels, OR extension levels and MP VA/POC levels. 3cent OR resulted in 4X OR.
+3 and +8 (2 units).
I used to trade unit size of 5 contracts for up to 3 units. I have removed most of my capital from the account (post MF Global) so I am now trading only unit size of 1 lot.
Even though I only day-trade, I use $10K equity per contract for grains and $15K per contract for YM and 6E.
Tuesday, 12/6/2011
Once again, Bar 2 is an inside bar . 3 cent profit booked on half on the resulting long trade. (583-586). Possibility of reaching yesterday’s settlement price of: 591
2x OR is same as yesterday low. 589.50
Closed the trade as I type this. Limit sell filled.
+3 and +6.50 (2 units)
I still think the gap gets closed by reaching the settlement price. Beans staying green today, giving some support to corn and wheat.
Tagged 591 on Bar 47(2′) and turned green for the day!
PP @ 595, just above 3X OR. OR is 4.50 today (I Use first 15 minutes for OR for grains). No sign of sellers so far, but beware volume spike at Bar 21(5′) following a wide range bar.
Beans staying green, but not making progress. The Volume spike produced a retracement. Looks like they are working on a 3rd push towards the PP. December is usually a seasonally bullish month, but daily is in a downtrend from Mid Nov peak.
Triple Green, as LC would put it. Beans, Wheat and Corn. Approaching PP with one hour to spare. And done – as I type this. I think all the anticipatory biases are exhausted.
Closed at HOD, above 3X OR, PP and Prev Day Mid. Classic Trend day. Left some cents on the table. May need a 3rd unit for a runner.
Here is the entry. This is what Mr B calls “Third bar breakout”. If the second bar is an inside bar, it is deemed to be the pullback and any extension of bar 1 range is a breakout and a valid entry. Strictly not the third bar today because of two inside bars, but the same principle applies.
4 days of lower lows and lower highs in the daily.
Open gap down way below Pivot Point
Open in October monthly opening range (start of a rally then)
Limits for the day: 551.00 and 631.00 – plenty of room
Opening bar was the LOD, so no heat at all in the trade.
Thanks for the postings and the chart. Nice to “see” a chart that is legible. Thank you.
You are welcome. sorry for the black background, but that is how my screens are. Legible somewhat cuz my eyes have been working for too long. 🙂
12/7/2011 Wed
DT at 597 with a 4 cent neckline. Fixing to open down – Beans may open up.
First bar bias down. Broke the DT neckline.
Bar 2 Equal Low. Ignored. Down bias in subsequent bars.
2 PB bars done. May not post if trade triggers.
In short at 590.75. First target is 587. Back in OR, which is not good. PP did not offer resistance. Also not good.
Stopped out -3 (2 units).
Recovered the losses with another trade. I will try to post the actual Bennett setup parameters to be fair to his methodology. Mine is modified with tighter stops and re-entries. Also distracted by trades in YM today. Normally I do not trade YM much during roll-over week.
One of the pesky issues of 3rd bar breakout is the second bar. The ideal condition for a 1 bar pullback is when it is a true Inside bar, making at least a 1 tick lower high and at least a 1 tick higher low. If the second bar has an equal high or equal low, my rule is that it is not a pullback on that side. If lower high and equal low, third bar breakout over the first bar high is still valid b/o and a long entry. Taking out the low is not and requires the pullback of 2 consecutive higher lows.
If the short entry has been taken after the second bar today, there would be my usual 3 cent gain, when the market went to the prev day DT target range. I am still evaluating this strategy.
Will be AWOL for the rest of the week and away from the market. May still post the price action, if I get the chance to review the market.
12/8/2011 Thu
The trader I am working with tells me that today he traded corn successfully. He strictly follows the Bennett method and just called to say he closed the long trade. I will try to document that tonight from his trading journal.
This is a nice one.
Gap down, but buying from the get go after a quick dip in Bar 1.
Bar 2 makes HH HL. Bar 3 pullsback, but does not take out Bar 1 low. Bias is bullish so far. First objectives are prev day RTH swing lows. Bar 4 is an equal high. We don’t see it as pullback #2. So we have to wait for further price development. (Buying this b/o can work for aggressive trader types).
Bar 8 makes a swing high and Bars 9 & 10 make lower highs, giving the requisite 2 bar pullback.
Bar 11 break out and entry.
To get the R value for this trade, we look back to find the first bar that has LH, LL than the immediately preceding bar. Bar 9 qualifies.
This account trades 2 units of one lot each with 1R and 2R profit goals. Initial stop level is discretionary depending on momentum and general market environment (e.g. dollar index), but 1R is recommended, but can close earlier and re-enter if necessary. I think Bennett recommends 0.5R or 0.75R
Anyhow this trade develops without further heat and gets to a no loss trade by Bar 16. There was more money in the trade, but handsome profit for a blue collar trader trying to make a weekly pay check. Less than 2 hours in the market and then go off to play, teach tennis, string rackets and goof off for the rest of the day.
I think you can click on the chart for a clearer display.