[101 Trading Ideas] Corn Predator Prey #strategy #idea #101tradingideas

101 Trading Ideas is a book that helps traders quickly develop strategy ideas. This strategy is another example of how to use 101 Trading Ideas to find alpha. More info on the book at the end of this post.

101 Trading Ideas:

#40 Predator Prey

Triggered Idea:

What happens to the price of corn when the wheat and soybeans are viewed as prey and the dollar is viewed as a predator?

From Triggered Idea to Trading Strategy:

When wheat and soybeans (prey), are rising and the dollar (predator) is falling, the ecosystem and predator-prey balance should be right for corn to rise. And vice versa. Use pullbacks in corn for entries.

Long Rules (can reverse)

the average close of wheat over the last 8 days is higher than the average close 8 days ago, and (prey)

the average close of soybeans over the last 8 days is higher than the average close 8 days ago, and (prey)

the average close of the dollar over the last 8 days is lower than the average close 8 days ago, (predator)

the close of corn today is lower than the average close of corn over the last 8 days (pullback)

then buy corn

Short Rules:

Opposite long rules

Exit:

On the second profitable close or after 4 days

Results (2007-p)Corn Predator Prey Equity Curve

trades: 167

w/l: 61%,  102/167

avg trade: 3.24 pts

z: 2.28

profitable 7 of 10 years, exceptions 2007, 2013, and 2016

Notes:

I like the buying a pullback piece of the strategy – so simple.

This should also work trading wheat and soybeans.

A rough draft, alpha hunt idea. Not a complete strategy.

There is risk in trading. Most strategies degrade when moving from in-sample backtests to out-of-sample live markets. Be careful.

101 Trading Ideas:

This strategy idea was triggered by 101 Trading Ideas, A Magical List for Fast-Paced Alpha Hunting.

More info here and available on Amazon

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