#145: BEFORE YOU EAT BREAD, PROFIT ON WHEAT
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DISCLAIMER:  Futures trading systems and commodity trading bear a high degree of risk. People can and do lose money.
Hypothetical results have many inherent limitations. Past performance does not guarantee future results. 

 

ACTUAL RESULTS SHOULD BE VIEWED WITH CAUTION, BECAUSE PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

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#145: BEFORE YOU EAT BREAD, PROFIT ON WHEAT

Some people in the Czech Republic (where I originally come from) love recalling the time of deep communism.

 

Their common argument is “bread was cheaper during communism”.

 

I’m honestly not really sure what they mean by that. To me, bread still seems to be damn cheap. And after all the inflation, I think it’s even cheaper than during communism.

 

So it triggers me a bit when I have to listen to this silly argument.

 

I think it’s just a stupid opinion. So I always reply with a similarly dull answer:

 

If you think bread is expensive, compensate for it with some Wheat trading”.

 

Of course, that’s where the conversation usually ends (which is understandable).

 

But we are traders, so let’s go a bit further.

 

Of course, I never mean “compensate for it with some Wheat trading” literally. But it doesn’t mean I am not a big fan of the Wheat market.

 

I think it’s a really great market for breakout swing trading.

 

In fact, we have quite a few Wheat breakout strategies in our hedge fund database, and some included in our CTA program.

 

And this is what they, in general, look like:

 

 

 

I think it’s good enough to consider them a part of the trading portfolio. Of course, the equity you’re seeing is an out-of-sample compilation only (no in-sample included). And the performance beyond the vertical blue line is since the strategy completion (all our hedge fund strategies were developed and robustness-tested with the framework I share in the Breakout Strategies Masterclass).

 

So, perhaps, next time, before you eat bread - bring these examples to your mind.

 

There is definitely some nice potential in the Wheat market.

 

As well as in other futures markets - with good, robust breakout strategies.

 

Happy breakout trading.

 

Tomas

 

 

 

 

 

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"Personal consultation with Tom helped me to re-evaluate the complexity of my robustness testing and optimization processes. Plus, it has helped me with a specific plan on how to take things forward. It has given me some great ideas on how to avoid overfitting and make my testing more robust and provided tips on low hanging fruit in terms of the best markets to trade for intraday/short-term breakouts."

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