Thesis: Look for an entry on the long side in wheat futures for a mean reversion toward the 200 day. Commercial hedgers are very long which helps increase the chance of a short squeeze if price gets above a key level. Exit on a test of prior support / the 200 day at ~530.

Vehicle: WEATwheat

weat

 

Originial Plan: Buy it as price confirmed the candle low that undercut the 4/28 low and closed back above it as momentum diverged positively. Own it against the 4/28 low with a stop slightly below that level.

WEAT
Entry 10.15
Stop 9.9
Target 11.4
Shares 1
Profit 1.25
Loss 0.25
Risk/Reward 5.00

Actual Entry: (Same as outlined above)

End Result: 

Symbol Date Entered Entry Price Date Exited Exit Price Profit (Loss)
WEAT 5/6/15 10.15 5/18/15 10.94 7.78%

Trade Notes: My exit was warranted given how quickly my price target was hit. Obviously putting on more size would have allowed me to scale into and out of the position, as it still looks like it could go higher. Another mistake was forgetting to put in a limit order sell at $11.00, so I had to take a few cents less when I saw my alert trigger.

Lesson: It’s okay to take profits “early” when the risk/reward is no longer as favorable as it once was, especially when trading such small size.

Weat Long (+7.8%)