TOP FARMER WEEKLY PERSPECTIVE 03/17/2023 BY BRYAN DOHERTY
Setting Sell Targets
Can you create your own luck? How many times have you told yourself you were going to make a sale if only the market would move to a certain level. Then, when it did, you didn’t sell. Likely it was because you did not have an order in place. It was just an idea. If this sounds like you, know you are not alone. By actually placing an order, you have created a disciplined process to get what you intended. There is power in discipline. Why do so many people fall flat on this simple concept?
The most likely reason is emotion. As the market reaches a certain level, you have been rewarded by doing nothing. By placing orders above the market, you are now setting a price cap. We all can remember a time where we were glad we didn’t have a price order in place while watching the market zoom higher. Ultimately, you need to be a seller. Set price levels where you would be happy if the market gives you a chance to sell, and remember the reasons why you would be happy. Write down why (this is important) and stay with it. Should prices go beyond your sale price, don’t look at this as a poor decision. Likely, if you are falling behind on one sale, you are probably gaining value on other unpriced bushels. Then set more price targets. As your sales accumulate, you may need to be more selective in your price targets. Recognize that selling at higher levels is a way to average-up your bottom-line selling price. Though it sounds simple, it’s difficult to put into practice. Remember also that what goes up often comes down, and the speed of the drop can be fast and furious, especially in commodity markets.
Is there power in scale-up selling? Those who are patiently waiting for a rally to peak often are rewarded and able to sell at a high level. A sale is made, and then what? If prices slide, the challenge is now to make more sales in a down market environment. Your emotion and behavior have been rewarded for waiting, and will now likely be used to rationalize being patient for more opportunity. What if you don’t see more opportunity? Some bushels are sold high, and the rest participate in a market decline. The math behind scale-up selling makes sense, and you should consider that as part of your marketing strategy on a third to 50% of your expected crop. The old saying, “no one ever went broke making a profit” comes to mind.
Conversations with those who could help you set price orders and limits are critical. Talk to your advisor about price resistance areas on charts, where prices may struggle to get through. Use charts to provide a vision of moves like retracements, overbought and oversold conditions, or certain buy or sell signals. Understand the risks and rewards of any action you take – including a decision to wait. Don’t let the wait-and-see mindset overshadow a disciplined scale-up selling approach. Create your own luck by planning ahead.
If you have any questions on this Perspective, feel free to contact Bryan Doherty at Total Farm Marketing: 800-334-9779.
Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.