We never guess and neither should you!
Your passion is farming...
Producers much prefer spending their time in the fields rather than developing, monitoring, and executing a marketing plan. Unfortunately, all that hard work, time and dedication can be futile without a solid marketing plan. Benjamin Franklin hit the nail on the head when he said "Failing to Plan is Planning to Fail". That's where ABSR can help...
Our passion is market research and trading...
ABSR is a commodities research firm specializing in futures/options markets and index products. Our founders 25+ years experience in futures, options, and over the counter markets as both an institutional trader and commodity trading advisor (CTA) makes us uniquely qualified to assist producers market their production. Through trial and error, failure and success, we have developed a strategy grounded in the following market lessons:
- Success in the markets is a marathon not a sprint, its about consistency over time.
- You will never find the market holy grail, but you can find a measurable edge.
- Markets are in a constant state of flux, at times trending and other times consolidating and it is impossible to know in advance.
- The introduction of discretion and emotion (guesses, hunches, feelings) virtually eliminates the predictability of the system.
- If you sold the high or bought the low, you probably made a mistake.
- You have to know today what you are going to do tomorrow.
- The market has a paddle big enough for everyone's ass. ( I credit my late dear rancher friend Frank Morgan for this one).
Every developed system or methodology will have benefits and faults, and as of this writing we are not aware of any that work in all market environments all the time. The best systems however, are systems that can produce a consistent measurable "edge" across multiple time frames and market sectors. We believe we have designed a system tailored around marketing agricultural products that meets that quality.
ABSR's proprietary system generates both buy and sell levels that have proven to be statistically significant over time. The foundation of our system is two independent market signal generators. The first is a volatility expansion (VolX) model and the second a momentum or trending (MomTR) model. Why two independent models?
We believe there are basically two market "states"; mean reverting (aka consolidating), and trending (up or down). Indicators that work well for one state, generally don't work well in the other. Understanding that we cannot know with any degree of consistency what the future state of the market will be, we overlay the two.
The VolX model is designed to capture price expansion movements that fall outside of levels we would expect based on historical price volatility. This model works especially well when markets are consolidating by capturing short term price spikes. The momentum (MomTR) model is designed to recognize trend direction and more importantly reversals in trend. We employ this model mainly as a "safety valve" insuring some action will be taken in the event a trend (opposite our desired direction) develops before a signal is generated from the VolX model. In other words, we are equally if not more worried about not selling in the event of a sustained downtrend than selling in an uptrend.
A key component to our model is the generation of entry levels or multiple levels in advance of the next trading period (see market lessons above). Using indicators that operate on a lagged or delayed basis have inherent flaws. They can be effective for medium to longer time frames but we believe knowing levels in advance has significant advantages:
- Orders can be entered on your schedule before or after the market session.
- Slippage and missed execution markedly reduced.
- Significantly simplifies execution of the marketing plan.
- Virtually eliminates the anxiety and stress of "on the spot" execution.
Multiple Time Frames:
In addition to knowing exactly what levels we want to execute, our system also generates a specific quantity of execution in percentage terms. This allows for a rather simple calculation to determine contract size based on the producers marketing needs. How do we do this? First, we know roughly how many signals we will get over any given time period. Second, we calculate multiple time frame marketing scenarios so you can follow the one that most closely meets your needs. Any divergence from the expected plan can easily be adjusted using the additional time periods to compensate. Of course we are happy to work with you to develop a customized plan if you needs fall significantly outside of our standard time tables.
Accuracy + Accountability = Success
We take a relatively simple and realistic approach. Our goal is two fold:
- Execute at least 90% of our planned volume during the marketing period.
- Sell at a weighted average price at or above the markets average price for the same time period.