I’m adding another component to this project. I would like to help the reader see and understand a little bit better the “method to the madness” that is the way I trade. At its very basic, I’m looking for support and resistance levels, then decide what I’m willing to risk on a breakout or reversal to those levels. The name of the game is patience and risk management. I’m still learning. So, here is an insight into how I see things.
Potential price action that I’m interested in:
Short, Sugar at $13.50.
Long, “C” coffee at 1.20.
I’m currently long NatGas at $2.60.
These are definitively contrarian trades. They have worked best for me the last few months. Doesn’t necessarily mean I’ll always trade this way.
I waited for today to enter the Coffee trade. It was starting to show the rebound that I was expecting, which provided a risk setup that I liked.
Sugar on the other hand, is still in the waiting lane. One reason why, it’s because after digging a little more, I’m not sure the two should be traded differently. My indicators, namely, charts, fundamentals, momentum and COT are very similar. The only thing that differs is the fact that I’m not sure the market has fully absorbed the change in regulation surrounding sugar in Europe, which will probably continue to flood the global market for another year or so. There is also a general long-term theme of sugar demand going down globally. Tough to trade that information. It’s just tainting my perception of the trade.