Sugar Commodity Futures Trading - Here Are Some Sweet Sugar Trading Tips That You Should Know By: Mike SinghThe widespread use of sugar and its by-products, which include the use of ethanol, has made sugar futures contracts a highly profitable venture if and when you know how to play the market. Here are a few thoughts and tips on the matter.
For beginners in the commodity market, engaging in the trade of sugar futures contracts is a great way to acquire knowledge and experience in investments. The most notable of properties of this commodity market is the fact that only small margins are required and that the market rarely makes extreme moves in either direction. Thus, traders and investors can wait to make their move for more favorable conditions.
However, there have been instances when the price of sugar in the worldwide market has experienced extreme swings, thus, affecting investments in sugar futures contracts. Investors are well advised to be mindful of such wild swings, no matter that it happens rarely. Also, it will help to know that the sugar industry appears to make big moves every eleven years or so.
For normal markets, investors can buy plenty of time before making their moves especially as strategies for straddles, strangles and spreads are very abundant, indeed. The use of swing trading techniques and wave analysis during long-term formations and patterns are highly recommended.
If you are to follow the pyramiding technique, which is very risky, you have to ensure that catastrophic stops are adjusted so that losses may not be as great if and when the market reverses on itself.
During big moves in the market, you must look to exit positions. The best time to do so is either near the close of the trading day or during the morning opening. This is because the sugar futures market has a tendency to reverse after extremely large moves by offering big gaps the following trading day. As much as is practicable, don't keep your big profits over the weekend in the belief that Monday will present an opportunity for a large follow through.
Another effective trading technique that almost always assures equal chances of profit and loss is called scaling out. Basically, you sell one-half and keep one-half of your position, which means that you are always one-half right and one-half wrong no matter the trading decision you make. It is not for everybody though especially for those who desire an all-or-nothing stand on the futures sugar contracts.
You should also look into the opportunities generated by the TimeLine forecast, which shows strong moves in either direction for the sugar industry and, consequently, its related futures contract. To make a long story short, it allows the investor to focus on the possible directional positions and, hence, make a more informed decision.
You also have to consider using the automated option software. This way, you can take the tedious work of calculations out of the way and instead focus on the qualitative analysis that must be done with the quantitative data on hand.
In conclusion, no matter the strategy adopted in sugar futures contract speculation, you must take calculated risks. The abilities to analyze trends, make forecasts, and understand the quantitative information generated by various tools are necessary to make informed decisions and, hence, calculated risks. Use such an ability and be rewarded with profits more than you can possibly earn on your day job.
You might not know that trading sugar commodities profitably isn't that difficult. Visit http://www.commodities-trading.org/ to learn more.
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