The Van Trump Report

Why I Continue to Hold a Bullish Position in Corn

Corn bulls will be trying to hold some of yesterday’s gains. Perhaps increased Chinese buying and a bit of stabilization in crude oil can stop or slow some of the bleeding. I continue to hold a very small bullish position but have prepared myself mentally for the price to drop to sub-$3.00 per bushel. Many may wonder, as my son has recently asked, why I am holding a small bullish position if I think prices could continue to tumble lower. All I can say is that years of trading and investing has forced me to look deep at my own mental tendencies and overall psychology. I am not a believer in anyone being able to pick bottoms. So when I see a market that I deem is starting to get down into a lower end of its longer-term range and there could be some fundamental reasoning for being a longer-term bull I will start to build a position. I determine how big of a position I ultimately want to control, then divide it up into a few small units, generally four to eight. I like to view each of these units as my “ammo”. I will fire off one round of ammo then wait, fully anticipating that I will be shooting more rounds as the market moves lower. If I don’t do it this way, I found that I tend to miss a ton of great opportunities i.e. I wait to pick the bottom and miss it because I wake up one morning and an unexpected news headline catches the bears offsides and the market immediately trades +20 to +30 cents higher. When that happens I tend to become psychologically frozen, i.e. wondering if it’s simply a head-fake, will I be suckered into another bull trap, I start thinking why would I buy it now +30 cents higher when I could have purchased it yesterday -30 cents cheaper? So for me, when I’m initiating a longer-term bullish position in a downward trending market, I know that in order to change that trend it’s going to take something unexpected that catches the majority in the trade (in this case the bears) offsides. Unfortunately, if I’m not already in position with a plan and in “execution mode” my mind will start playing a ton of crazy tricks. That hesitation and time spent trying to sort out my thoughts and second-guessing myself will most often cause me to miss the opportunity. I’ve said it a million times, trading, investing, marketing a crop, or trying to time the sale of livestock are all very similar in the fact you have to really know your own personality, your own psychological weaknesses and most importantly how you will respond to various circumstances and variables when they are thrown +100 miles per hour in your direction. I remember a few coaches always telling me you can jack around and have fun all you want but when you step across the white-line and onto the actual playing field you have to have your game-face on and be fully ready for action. For trading and marketing my three rules are #1. Know yourself inside and out. #2. Know your plan inside and out. #3. Know your execution triggers. You need all three to have a chance at beating the best. Having a plan is good, but if you can’t execute it’s worthless… Enough on my trading philosophy, I’m sure everyone has their own thoughts and techniques. Bottom-line, we need a massively improved “demand” story and or some major wide-spread weather event to take the bat out of the bear’s hands. Until demand or weather surprise them I suspect they will continue to take some healthy swings. 

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