Commodities are still Hot. High amounts of leverage can be used to trade Gold (CBOT mini and 100oz), Silver (CBOT mini), Corn, and Soy Meal. Leverage can be a double edged sword, but if used correctly, a trader can make large capitol gains each day.
A new indicator I found will help determine profitable entry and exit points.
I will demonstrate with a diagram below.
Product: Soy Meal
Chart: 1 minute with SMA 10 and SMA 18 (SMA=Simple Moving Average)
How to use it: Watch the SMA 10 (RED LINE) break above SMA 18 (BLUE LINE). Almost always trade in the direction of the SMA 10 beacause the upward divergence signals a new or continued up trend. The trade is exited at a profitable spike or closed out when the SMA 10 touches the 18 and heads under the 18.
Anticipation of the SMA 10 moving upward, right before the averages touch, is an even better time to go long. Anticipating too soon will become more speculative than trend following. The goal is to simply ride a trend and then exit at a profit, or set a trailing stop to protect profit.
The Sexiness of Soy Meal
The sexiness of futures is in the leverage. A $1.00 gain in Soy Meal translates into $1k of profit for each contract. Every .01=$10 which can magnify gains and losses, so it's important to have a good entry point.
Or if soy meal doesn't suit your fancy, look at CBOT mini silver, Gold, Corn, Wheat among many other commodities.
Next week I will be posting my P/L each day.
My profit target is set around $500-2000 a day.
Stay tuned.
