June 7, 2017 – Trade idea – Long corn on possible short liquidation
It seems that hedge funds are loosing nerves and started to close their shorts. This would come at one point in the July contract anyway as they would need to roll over positions before the notice date 30th June. The open interest in July is still more than double compared to September or December.
This activity was obviuslz reflected in the price action yesterday when corn broke out from the triangle and closed well above the May high. We can play this with a stop limit buy entry on the july contract at 380/380.2 with a stop loss at 374 and the first take profit 392 (1-2 week) . For the second profit taking we will use trailing stop after the first target is hit but we close it before the close latest 29th June.
From risk management perspective position sizing is crucial. Make sure you dont risk more than 2% of your account but if possible keep your risk [(Entry-Stop)xContract size] even lower around 1%. If your account is too small to play with futures, go for CFDs instead but spreads are usually wider there so take this into consideration.
Let me know if you have any question regarding this trade as you may find few things tricky if you didn’t trade futures yet. Good Luck and remember to watch your risk and be consistent
Mr. Tech Man
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