Here is the update that went out to MDA subscribers 12/14/15 highlighting our stop exit in the Beans vs Wheat trade.
The Long March Beans vs Short March Wheat spread position we have been holding @ 4.10 has reached the allotted risk level designated when the trade was written up @ 3.80 (-$1500 per spread before fees.) Since this is not an exchange accepted spread we will have to leg out of this trade at market. If you have questions on how to do this please reach out to me.
Although there is still plenty of time on the seasonal window to hold this trade, we need to stick to the trading plan when the trade was written up. I will continue to watch this spread relationship and could have another trade idea in the near future if it appears we seasonal setup is coming back in play.
Trade: Long March Beans – Short March Wheat
Leg1: Buy March Wheat @ Market
Leg2: Sell March Wheat @ Market
Daily Chart of the Trade:
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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