Today I am going to show a case about this concept of free money. This is a trade in the Corn market today. To make this explanation easier, below are the chart of Corn Futures May13 contract.
1. The very first step is to identify a limit-up or limit down market, in this case Corn May13 limit-down last Thursday. For Corn Futures the limit-down move value is 40 cents. It closed 695.25.
2. The idea is to short Corn May13 on the opening if it open between 655.25 (695.25-40.00) and 695.25. If it opens too low, I would assume the down momentum is too strong and probably exhausted at the opening.
3. Stoploss and exit. I like to divide the limit down value to 10, in this case 40.00 / 10 = 4.00. The initial stoploss is set to (Entry Price + 4.00). Short 679.00. Stoploss 683.00. You can set target price to 2 or 3 times the risk value, T1=671.00, T2=667.00. But, make sure to trail a portion of position till the end. Who knows, there might be another limit-down in the making.
#I need to point out the difficulty in this trade in when I try to short at the opening when market open. You need to very fast in executing the trade especially market moves extremely fast with orders flying around in the opening.
Enjoy picking up "Free Money".
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