Immersing ourselves in studies of the futures markets was a priority every day from the moment we crossed the California-Oregon border. Armed with our laptop and wireless air card there wasn’t a commodity price chart in existence that Shawna and I weren’t right on top of. This became daily habit as we traveled in our motorhome up through Oregon and into Washington. As we turned East across the top of the country two trades started coming into view.

The grain market prices in Chicago and Winnipeg had been trending down for quite some time but it was here that both the corn and canola markets began to drop off dramatically, reaching deep into thirty year historical lows. Our curiosity became insatiable as the market kept falling. Almost every day it would fall lower and we would say, “If it goes any lower the farmers will be giving it away!”

One day while chatting with our broker I mentioned that it would be great if we could visit with him and maybe even take a tour of his offices when we arrived in Chicago. We were only a couple of weeks out from arriving there and didn’t want to miss the chance to personally say hello. Andrew, with a hint of mystery in his voice, said, “let me call you back on that.” I suggested to Shawna half in jest that maybe our boy in Chicago didn’t have much of an office and was feeling a bit shy about us stopping by or worse, he didn’t have an office at all and had been working out of some hole-in-the-wall apartment. Who could’ve known what was about to happen…

CHICAGO BOARD OF TRADE

"Go confidently in the direction of your dreams" ~Henry David Thoreau

The next day while preparing to depart Kalispell, Montana, Andrew phoned. It seemed he had taken the liberty of making a phone call to a fellow friend and commodity trader to clear our family for a customized personal tour of one of the oldest financial district buildings in Chicago. Andrew had worked out the details to get us directly onto the trading floor of the Chicago Board of Trade. We would meet Andrew for a visit at his office and then take a short stroll to the “Board”. It was located two blocks down from Andrew’s brokerage office.

Our family was going to see a piece of American financial history. As we drove across the upper states drawing closer every few days to the Great Lakes we kept an even closer eye on corn and canola.

Chicago in fall seemed welcoming as the colors along Lake Michigan were beginning to turn. The White Sox had just won the World Series, and everywhere we looked there were cars with flags and banners waving for their team. The whole city seemed to be in celebration and we were excited to be there.

A DIFFERENT WORLD

An hour had scarcely passed from the time we first met Andrew at his office, walked down West Jackson Boulevard, and stepped through the street level doors of the famed Chicago Board of Trade Building. A moment later as we exited an elevator Andrew guided us to the exchange’s security counter. After receiving clearance the five of us proceeded up a set of escalators adorned with art deco sentinels to the twelfth floor—more security. The security guards had a brief exchange of dialogue with Andrew and our group stepped from large squares of granite flooring to the plush black carpet of the commodity exchange floor. A jolly fellow named Bill, dressed in a green jacket, an “I Love Lucy” tie, and a big smile, greeted us as our tour guide. He beckoned us into an adjacent room swelling with noise and activity.

Windowless, with amazingly tall ceilings and massive square footage, the room was primarily made up of dark muted colors. It was as if we had entered an entirely different world; large circular stair-stepped areas, one after another, beginning with a top rung two steps height above floor level with steps flowing downward to about four feet under floor level at the bottom of each trading pit. There were hundreds of people standing in and around the large circles all at various levels of the pit steps.

Poised above and to the side of each pit sat an employee of the exchange, perched in what resembled a life guard’s chair, in front of a keyboard and small computer screen. Typing at an incessant pace, we were told this person had the responsibility of keeping in step with the most recent agreed upon price arrived at amongst traders in their respective pits. It was their job to enter open outcry data into their computer, streaming prices to huge lit boards located around the room’s four walls for everyone to see. Ultimately this price data would then be forwarded at the speed of light to the outside community of commodity investors around the globe.

*price data from the exchange is sold to thousands of investors, companies, and corporations at variable subscription rates, all of which depend on how quick they want to receive the data. The ancient adage holds true that time is money. For example, commodity hedge funds may pay thousands per month for “real-time” price data feeds, whereas an individual trader might choose to pay a more nominal subscription fee to have 20 minute delayed quote service.

On the floor Bill pointed out trading pits that included wheat, corn, soybeans, soybean meal, and soybean oil. Integrated into the rooms walls were live quote price boards brightly lit in yellow, green and red colors with numbers rolling at a jubilant pace. Standing with our backs to the wheat pit, Bill instructed us to turn around—at the top of the pit stood three people in all blue coats with bold red letters across their jacket backs. The letters read, “Kellogg’s”. We were told they were there to negotiate contract prices on wheat and other commodities relative to the production of cereal products.

As we walked the floor area encircling the pits Bill would play commentator to a rush of buying and selling that began at one side of the room and tell us what to watch for as the flurry of hand signals and yelling from traders would move from one trading pit to the next, like a wave affect. As a veteran commodity trader, our tour guide explained that as a rush of buy orders came into one commodity pit it would often trigger a rush to buy or sell in neighboring pits, as they were all interrelated in various ways. The supply and demand issues driving price action in one commodity would influence others as well.

Leaving the rush of sound and flurry of hands Bill then walked Andrew and our family into an adjacent room, much the same size, used exclusively for trading financial futures contracts. It was here that we would meet people engaged in trading world currencies and indices. Buying and selling the British Pound, T-Bonds, or Eurodollars and others…As we looked out over the descending pits Bill suggested we watch one in particular. It was the Eurodollar options trading pit and just to the side of the pit on camera with his microphone, Rick Santelli of CNBC, was giving a live news update to the world.

On our way out Bill guided us back alongside the grain pits. As we took one last glance up at the electronic boards I couldn’t help but notice corn was down in price again…

LARGER VISION

“The greatest factor in any undertaking is one’s belief about it.” ~William James

The business of commodity trading was taking on a new reality— ten years of dabbling in the markets but it wasn’t until now, that I could truly say the commodity business felt real. This was true for all of us. Until this moment Shawna and I had studied our price charts each week. Our children had watched their mom and dad spending a few minutes here and there perusing the paper charts or computer generated charts, and on occasion they had even joined in on a conversation about the latest commodity news. But now it felt different for all of us.

As we thanked Andrew and departed the Windy City, reality was setting in—our moment of opportunity had arrived and we all could feel it. With new perception, our brief time at the Chicago Board of Trade brought clarity to our thoughts. Commodity investing wasn’t just a game anymore...it was big business.

From Chicago, our travels took us through hundreds of miles of corn fields. After a stop to say hello to friends in Peoria, Illinois we continued on to Louisville, Kentucky. Along the way there was even time for a visit to a farm with a corn maze. This was great for all of us; we all burned off some energy trying to find our way through an intricate corn field maze that had been created using a special GPS guided tractor. And on the business side we had a chance to talk with the farmer that owned the field and other fields in the area.

One day while in Louisville Shawna and I made the decision to fully commit to entering the corn market with an amount of funding that seemed substantial at the time. With a wire transfer request to our bank, the funds totaling $100,000 USD were moved to our commodity brokerage account in Chicago. The next call was to Andrew as we placed buy orders to layer in as the market continued its downward spiral.

For years we had been praying for this opportunity and here it was right in front of us as we reviewed price charts each evening. Corn continued drifting further into more than thirty year low prices. “How low can it go?” became a very real question as we began accumulating long positions. The market bottom had to be close because if it sank much further the farmers would be handing out free corn. The plan was to settle in as deep as we could and just sit tight—the market had to find its bottom soon at these low levels. If it meant staying in this trade for an entire year we were committed to doing it, and nothing was going to shake us.

Within a couple of months both the corn and canola markets had begun to flatten out. Further studies of the longest term price charts we could find validated our thoughts that commodity prices couldn’t stay there for long but would often act tired and lethargic before coming off a multi-year bottom.


With a phone call to Andrew we found out he could enter trades for us on the Winnipeg Exchange in Canada. We decided to add canola to our portfolio. Having purchased all that our account could safely handle, it was down to two distinct things; corn and canola making their move and God granting us the patience to wait for it.

THE DREAM TAKES SHAPE

Then the month of March arrived. Spring had sprung and it was as if the grain market opened its eyes and decided to wake up. Shawna and I couldn’t wait to review our price charts at the end of each trading session.

Sometimes we wouldn’t even wait that long and there we would be, jumping at the chance to see what the market was doing during the trading session. The grain markets would be down one day, then up for three consecutive, back down and then rising up again. As we watched the market awake and the patterns develop it almost resembled the rhythm of musical notes.

Although the markets had drawn our account down to a low of $54,000 during the buying stages, in a matter of weeks corn and canola were bringing it all back. One week in early March, the account shot past its initial $100,000 starting balance like a rocket. Midway through the following week saw our trading account nearing $150,000.

Rendezvousing with family on a camping trip to a Northern Arizona state park a few weeks later culminated more gratitude for the commodity futures business. Enjoying a cup of coffee with my dad outside around the campfire one morning brought a nice surprise as Shawna came out of the motorhome to let me know that the grains had made another big move in the overnight electronic trading session. The commodity account was nearing $200,000 and the dream of full-time commodity investing was beginning to take shape.

(This post is an excerpt from ChartSmith-Forging Your Financial Future©, used by permission)

"The only way to true financial peace is to walk daily with the Prince of Peace, Jesus Christ" – Dave Ramsey








Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.
~Mark Twain







Risk Disclaimer


In an effort to comply with CFTC regulations please be so kind and read our IMPORTANT NOTICE:


Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. According to many experts, most individual investors who trade commodity futures or options lose money. Don't trade with money you can't afford to lose. Nothing in our commodity futures workbook(s), workshop(s) or website(s) shall be deemed a solicitation or an offer to Buy/Sell futures and/or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed during the workshop(s) or on our site(s).


Also, the past performance of any trading methodology is not necessarily indicative of future results.


Furthermore, being a successful PAPER TRADER during one time period does not mean that you will make money when you actually invest during a later time period as market conditions constantly change.


In summary, when investing in futures and/or granting options you may lose more than the funds you invested. When investing in the purchase of options you may lose all of the money you invested.