Candlestick Trading Blog

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If you are looking for a promising start to your option trading education, corn futures, at their highest in two years, continue to rise because of the combination of increased demand and dwindling supply. Such a combination makes this a great time to consider investing in corn futures.

There is a strong consensus among traders that this year is good for purchasing corn futures. In the USA, a lower than expected number of acres was used for corn and droughts in some areas damaged other fields. As supply continues to decline and demand continues to increase, it is likely that the price of corn futures will follow suit and continue to increase as well. If your stock trading plan includes options trading, corn futures could be a solid gainer, not only now, but for some time in the future.

While the corn crop in the USA this year will be one of the largest ever, it is anticipated to be below the anticipated world-wide demand as countries use more corn for livestock feed and ethanol production. Using a stock trading system such as Japanese Candlesticks, an experienced trader can see the indicators of an upswing in the corn futures market and move accordingly.

While the rush to buy corn futures continues to be incredibly strong, successful traders in corn futures will continue to monitor the market, looking for any kind of corrective pullback. If this correction occurs, futures investors will move in, seeing the opportunity for even larger gains. With indicators showing that end users are getting nervous about prices, which corrective movement may be near.

Corn prices may increase as hedge funds and other large speculators continue to buy more corn futures. This increase has been seen in the Soybean market as well. These groups are moving funds from old stand-bys such as crude oil, copper, and gold as their commodity trading intensifies. Having seen what can happen in other commodities, such as sugar and copper, investors are willing to move their positions in order to maximize their profit.

For the beginner investing in commodities, a futures contract is a forward contract, where the investor agrees to buy or sell an asset (such as corn futures, wheat futures, oil futures, etc) of any kind at a pre-agreed time. Such an agreement may also differ from forwards with regards to margin and delivery schedule. Because futures can be confusing, it is wise to consider taking a commodities trading course prior to any significant investment in the futures market.

Success is such a situation is dependant on a variety of factors. Familiarity with the corn futures (or any other commodity) is tantamount. Secondly, it is necessary to understand the markets and how they operate, especially regarding the commodity you intend to trade. Finally, it is extremely helpful to have a proven system such as candlestick trading tactics for evaluating the market. When fully equipped, a wise investor can be quite successful in the futures market. It is very possible that increasing your wealth today as a great deal to do with the “future”.

As the US economy has surged in recent history, competing forces have been at work. The economy, as a whole, has been carried on the back of a booming housing industry, surging in spite of the fact that other variables have been at work to hinder its growth. With the housing market stumbling into the November elections, the key will be to continue to watch oil economy. As oil economy continues to have a prominent role, its effect could be an important stock option trading strategy.

While the price of oil soared to a record high in 2006 of $78 per barrel, the economic impact of oil prices was offset by the surging housing market. With the housing market faltering, the impact of oil economy will assume a more prominent role in shaping the immediate future of the US economy than before. This will be a signal for successful traders in the options market to begin reviewing their holdings and watching the trends in their candlestick chart patterns for signals to buy and sell due to the impact of oil economy.

As mentioned, the housing market decline has the potential to cause a recession; however, the impact to the economy from falling oil prices will work to reduce this risk to a slowdown only. As fears of inflation subside, the price of oil will affect the economy substantially, whether positively or negatively, in the future. The price of oil shaped the economy in October 2006 when it dropped from its high of $78 a barrel for West Texas Intermediate crude to $58 a barrel. This drop in prices took place without a substantial change in supply and demand. It is also wise to note that no drastic changes in world events took place during this time. In this instance, many experts suggest that the technical analysis of the effect of oil economy was a run-up caused by speculation. Now that recent volatility in the Middle East has tapered off and no major hurricane damage was experienced to production facilities in the Gulf of Mexico, it is believed that price of oil, and its economic impact, will level out as well.

Other factors involving oil economy include:

• An oil strike by Chevron reportedly located in the Gulf of Mexico. While this find will not likely impact short-term, the oil and its economic impact will make a future splash on the oil futures market.



• The collapse of the hedge fund Amaranth. Experiencing one of the all-time investing mistakes, Amaranth lost $5 billion in one week trading natural gas futures. It’s possible that this could have both short and long-term effects on the economy and the oil futures market.



• The demand for oil in non-Japan Asia. While the effects of the staggering Asian demand for oil and its economic impact are indirect, the overall impact could be to keep oil prices inflated. These will have ramifications on both the oil futures and the economy, by keeping demand, and in turn oil prices, elevated.

Successful FOREX traders consider expert analysis and discussion of theory extremely important for FOREX trading. While the technical aspect of trading can’t be overlooked, it is equally encouraging for the trader to hear about examples of trading success in FOREX news. As with any other successful trading, FOREX requires the investor to analyze data and determine a feel for the movements of particular currencies. Afterward, the trader needs to implement his, or her, trading plan and monitor the deal for changes. Successful FOREX traders find that following a tried and true method can often lead to big profits in trading FOREX.

In the minds of successful FOREX traders during 2006, it has been apparent that the Canadian dollar was struggling under the weight of a very sluggish economy. Some analysts foresaw success in FOREX trading using a core long position in Australian and Canadian currency. The logic behind this thought was that had been a breach of trend line resistance, positive carry and the expectation of interest rate changes made this a prime a candidate for some successful trading. As news of Bank of Canada’s announcement of a lower than expected GDP began to trickle out, the experts recommended a long position in the US dollar against the Canada dollar. By trading a long position in USDCAD, this provided successful FOREX traders a hedge fund against a short exposure via the AUD.

Having defined the positions in this example, it is wise to identify some technical conditions involved in this example of FOREX trading success:

• After an extended decline, the AUDCAD showed signs of an improvement as indicated by an inverse “Head and Shoulders” pattern. This pattern was confirmed by an increase in the highs from May 2006 to July 2006.



• The initial correction ended in late July without a daily close below the critical 0.83 level. Because of this, upside beyond 0.87 seemed to be quite likely.



• The bottoming of the inverse “Head and Shoulders” pattern included a classic double-bottom, and was long-tailed in both instances, reinforcing its bullish nature.