Pondering whether to take the bold step to open a Futures trading account.

Was a bit discouraged when I saw a stock that had looked bullish with a possible flag breakout pattern drop today on moderately heavy volume.

I have already received a stack of forms on request to open a Futures trading account.

However, I'm starting to have cold feet, especially when I try to imagine myself caught on the wrong side of a contract like that for Wheat or Sugar.


Look at the chart below. If you had cut off the chart at Feb 1st 2010 and only seen the patterns to the left of that day, you might have concluded that the Sugar contract had a bullish breakout of a pennant consolidation pattern(in technical analysis parlance), a move that usually continues in the direction of the prior move.

However, I have circled the MACD and Stochastics indicator to speculate that this contract may be overdue for a sharp rebound.



But look what happened instead. The contract suffered a sharp decline of almost 28%, undoubtedly inflicting huge losses on those bullish on the prospects of the crystalline solid who were not quick enough to cut losses.

Even as I surmised that, had my trading contract been opened already, I had a bullish feel for the Wheat contract and might have entered a long position at around $4.90-$5.05,I find that the contract declined from a high of around $5.11 to $4.90 currently.

Not pretty.