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Tuesday, 25 January 2022 12:16

How to buy LRP like a Boss!

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Let’s face it, it’s hard to know exactly when to buy or sell commodities. I remember when I was younger, I would hear commodity prices on the farm report on the radio. I suppose I understood that prices were constantly moving but I never thought about target prices or historical prices. I really didn’t understand why prices would move higher or lower day to day or understood price action from a non-supply and demand perspective. I suppose I was ignorant to it at the time and limited via technology back then; however, I did eventually subscribe to DTN to get a glimpse of charting. Regardless, with today’s access to readily available data and technology it is easier than ever to follow and understand the commodity markets better. Barchart has great tools, but I have found Tradingview to be very helpful. With that said I want to introduce you to how I use Tradingview to help analyze commodities; more specifically how to use it to make better risk management decisions with emphasis on Livestock Risk Protection, but also Livestock Gross Margin, Darity Revenue, cash, futures, and options.

A few indicators are all you need to isolate better buying opportunities for Livestock Risk Protection as illustrated below. This set of indicators will help you identify specific entry points into Livestock Risk Protection, Livestock Gross Margin or Dairy Revenue if desired. The first step is creating a TradingView account. You will want to do this to be able to change your symbols (i.e., Feeder Cattle, Live Cattle, Lean Hogs, etc..) and create automated alerts of the signal on your desktop, email, or SMS. Once you have a TradingView account setup then navigate to a chart and add the appropriate symbol on a daily interval to begin displaying prices. Next you will add the Slow Stochastic indicator, the Williams%R (%R), Relative Strength Index (RSI) and Moving Average (MA). You will want to configure the Williams%R "Length" settings to 30, configure the RSI "Length" settings to 2 and configure the MA "Length" to 34. The slow stochastic settings can remain at the default settings.

Now that you have these indicators settings, you will be able to visualize when prices are trending and at key overbought levels that present opportune times for making LRP, LGM or Dairy Revenue purchasing decisions. Let's discuss how to utilize these key indicators. The primary indicator we want to focus on is the slow stochastic. When the slow stochastic is greater than 80 prices are considered to be overbought and the possibility exist for prices to reverse and move lower. A signal to buy LRP will trigger when the slow stochastic is overbought and a crossover of the faster series crosses under the slower series. This will be represented via the red down arrow and text indicating to buy. In analyzing the charts, you will easily see how this indicator and trigger signals higher prices; however, it’s worth noting that in an up-trending market the slow stochastic can stay above the overbought (80) threshold for several bars resulting in several signals each higher than the previous. As a rule, when closing prices are above the MA and the MA is rising sharply use a 3-bar consecutive close of the Williams%R below -20 as the entry trigger. If the Williiams%R closes under -20 for two consecutive days and on the 3rd bar closes back above -20 the uptrend is likely still intact, and you should revert back to the slow stochastic to trigger a buy signal. Under the later scenario closing prices should also be above the MA. Three consective closes of the Williams %R below -20 signals a potential trend reversal and warrants a good time to buy coverage out of the up-trend.

Lastly, when prices are in neutral or strong downtrends with closing prices below the MA utilize a 2-day RSI above 80 as the trigger until the closing price is again above the MA whereby you can revert to the slow Stochastic. Prices that are in strong downtrends cause both the slow stochastic and Wiliams%R to be below their overbought levels (i.e., 80 and -20 respectively). During these down trending markets utilizing the close of the 2-day RSI above 80 to trigger a buy signal, will help when coverage is critical.

Rules Summary

  1. When closing bars are above MA then wait for slow stochastic to be overbought and crossunder of fast over slow. Signal will trigger.
  2. During strong uptrends where MA rising sharply and %R is above -20 for many bars, wait for a 3-bar consecutive close below -20 to trigger buy
  3. If closing price are below the MA or MA is falling-flat, utilize the 2-day RSI above 80 as trigger to buy.

If setting this all up sounds too confusing, then SUBSCRIBE and get access to the LRP Boss Indicator to automate buy signals in real-time. Check back daily for signals or use automated desktop, email, or SMS alerts to automate your buying signals. TradingView has a great mobile app as well so that you can keep a keen eye on the chart and indicator as needed while you are away from your computer.

How do you get started?

  1. Subscribe to one of Agrestic Research's Plans and add the optional Indicator.
  2. Sign Up for Trading View
  3. Send us a Support Ticket with your TradingView Username and email used to register so we can grant access to the inidicator.
  4. Optional - Schedule White Glove Service to configure alerts and give quick demo if desired.


Obviously it is best for a producer to understand their breakeven price. Likewise, it is always wise to not get let your coverage lapse. Be sure to understand your marketing window and match up to your buying to the LRP endorsement length. The frequency of triggers/signals happen often with several opportunities to establish coverage. For those with time to buy, use the strong up-trends to your advantage. If the market is sideways to down, don't get caught without coverage. Use any of the aformentioned signals to establish coverage.

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Read 349 times Last modified on Tuesday, 01 February 2022 19:47
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Stephen was born and raised in Northwest Oklahoma where he grew up working on a farm and ranch. His interest in Agriculture led him to pursue a degree in Agronomy from Oklahoma State University in which he graduated in 2000. During his time at Oklahoma State, Stephen interned for Crop Quest as a Crop Consultant, worked at the Oklahoma State Peanut Labratory, and worked a summer for Refco as a floor runner on the Chicago Board of Trade. Upon graduating he worked back on his farm and for an aerial applicator making chemical recommendations; as well as, directing and managing alfalfa operations. Later Stephen returned to school and recieved an MBA from University of Central Oklahoma. In 2004, Stephen joined AgriLogic, Inc and worked as a Research Analyst performing research, anaylsis, recommendations and writing for contracts with the USDA's Risk Management Agency (Federal Crop Insurance Corporation). Stephen remained at AgriLogic for more than 10 years where he become a crop insurance professional with over 10 years experience in the research and development of innovative risk management products and service, a strategic thinker and leader of many divisions with solid skill set in the areas of private product development, mapping, underwriting, claims, and quantitative analysis. Following his time at AgriLogic, Stephen became the Director of Information Technology at Ag Resource Management, whereby he was responsible for IT strategy and product development of ARM's underwriting technology.
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