Charts courtesy of IG Index.
TRADE SHEET
Long Sugar, 16/12/09
Long-term chart here.
 
Trade Description

Long March 2010 London Sugar from 657.0. Entered after order to open was hit.

Details

Technicals
Sugar is in a strong uptrend. Broke out above recent resistance level two days ago. Strong intra-day support at 655 provided a technical entry level and an opportunity to place a tight stop.

Fundamentals
Sugar market remains tight. Excessive rain in Brazil and China releasing sugar reserves are the latest supportive stories.

Stop Position
651.6. Loss-to-stop = 0.25% of trading capital. I reasoned that, by jumping on the the long-term trend, and by jumping on the bandwagon two days after a breakout, I was betting that the strong up-trend would continue. I have therefore placed a tight stop; if it gets hit, I am likely to get a better entry level later.

Trading Plan
Add above next strong support level.

Entry Checklist

Are you trading against the trend? No
Is there a fundamental story? Yes
Is there a technical buying opportunity? Yes
Is the trade likely to be correlated with other live trades? No
Are you placing your stop at a point where the market would tell you you were wrong? Yes
How much conviction do you have? Medium
Does the risk accord with the conviction? Yes
Do you have a plan? Yes
If you are wrong, will you live to fight another day? Yes

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