Trading Sugar Futures 2012-05-15

Here I will note an example of trading sugar futures. I have been waiting to buy sugar on a bottom for a while now. Sugar prices have been on a steady decline for many weeks. The daily chart for sugar is showing an MACD-price divergence. Over the past two weeks or so, as price steadily declined, the MACD histogram steadily inclined. Now we are at a point where the MACD moving averages are crossing. On the 60 minute chart we are also seeing a somewhat of a stretched out MACD divergence. Prices made slightly lower lows over the last few sessions, and MACD has made slightly higher highs. I missed buying on the bottom, so I bought on a return to the moving average after prices broke upwards.

Here is a 60 minute chart demonstrating my entry. Bought October sugar at 20.73 at 6:04.

I intend to take a somewhat longer term position in sugar. This may or may not be it. I am expecting prices to rally a little bit on the daily chart, and then return to make an equal or new low. If this is the case I will be taking my profits from this trade on a loose trailing stop, and then re-buying on the new low (which should be a really nice MACD divergence). If prices don't make that new low, then hopefully I won't get stopped out and I can keep this position open for my intended time frame. This is why I am going to keep as loose a stop as seems "logical". Don't get me wrong, I'm not trailing a stop based on a formula, I'm just using intuition.

On another note, regarding intuition, I'm reading an interesting article by some guy called Van K. Tharp called "Personality Type and Trading". It's a pretty interesting article. You just have to know what your personality type is, like INTJ or ENTJ or whatever. You can do a test online for free to find out what your personality type is.

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