For a couple of weeks the intermarket wheat spreads have been oscillating around the same levels. For those two weeks, I have been looking for MGEX wheat to break out to stronger levels against the CBOT and the KC. It's been frustrating.
The thing is...it's pretty hard to take 1-2 cents out of the market on these spreads. If they move against you, the losses can be substantial ---and even if you have just the right day-trading idea, the execution slippage and brokerage can eat up a fair portion of the profits.
So while it would be great to pull a few cents out of the market when the MGEX/CBOT spread trades in a 5 cent range for a few days, for me the risk/reward isn't good.
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