Sugar Futures Trade 2012-05-02

Here we will observe a sugar futures trade. Entry was at 6:12, at 20.84, and it was a buy. Below is the 60 minute chart demonstrating my entry.

What we see here is an MACD divergence forming a bottom area in sugar prices, at least, that is what I am hoping for. As usual, protective stops must always be used in combination with this type of trade.

Prices are making lows in the 20.80 range, while the MACD is trending upwards. Sugar has been in a fairly steady downtrend for some time. My aim with this trade is to catch a minor to moderate correction and profit. I am generally looking for a bottom in the sugar market on the daily time frame, this is not it. Rather, if this trade is successful, it will perhaps be a precursor to such a bottom.

As I often do, I entered this trade prematurely. I was specifically waiting for a new low below 20.77, but price was hesitating so I entered at 20.84. Sure enough, just one minute later prices went to 20.75. This is an example of one of the ways that it pays off to "know your market well". That is to say, trade markets that you know pretty well. Make sure to watch them a lot in the time frame you intend to trade. Small little details like this can improve your trade execution greatly.

On other notes, I am still looking for a lower entry into a long corn trade on the daily time frame. That trade will probably be a little longer term. I was looking for a cheap entry into cocoa, but it looks like that probably won't happen and I don't want to enter too high. I've entered this sugar trade, but I am still looking for a better bottom on the daily time frame in the sugar market.

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