CL Redux
- Thread starter schizo
- Start date
Great post, big hurdle to overcome when starting out. I was doing this all the time, and finally decided to have my husband write an automated program using my basic strategies because if I couldn't learn how to trade ALL my signals as soon as they occurred, then I'd have a system do it for me. He worked on a program and I began a long stretch of hard statistical analysis of the 5-min chart every day after the close. I'd scroll the chart all the way back in time so it looked exactly like it did in real-time. I developed specific rules for setups, entry, and exit, and do my bar-by-bar analysis, logging everything in a spreadsheet.
The automated system in its earliest beta state proved to me that even if I traded like a dumbass robot, with no discretion whatsoever, no regard for trend or moving averages, no knowledge of major news releases such as crude inventories and non-farm payrolls, and the crudest kindergarten rules possible, I'd still be slightly net profitable each week.
My daily analysis proved to me that if I traded according to my carefully defined rules, and traded all valid setups, I'd be nicely net profitable. The most important lesson from these months of analysis was learning to recognize valid setups as they were forming, when they are often rather ugly and indecisive-looking.
If you start scrolling your charts back in time end of each day and revealing one bar at a time, you'll start to recognize setups more and more easily while they're still in the very ugly stage that causes us to hesitate. Before you know it, you'll automatically trade the setup and trust that more often than not, it will follow through in a certain way.
Also, look at the price action on a smaller time frame from the time you hypothetically enter a trade and get used to how price wiggles, so in real time when you trade, the wiggles won't shake you out of the trade, and more importantly, you can often use the smaller time frame to more safely enter the trade.
An example of a trade I took yesterday demonstrating these concepts:
Following the positive NFP report, price spiked up, then sold off pretty solidly, breaking both the trend line and the 20-bar EMA (what Bighog calls the double-cross move). Price broke one previous support level, but found firm support at the support level just prior to the pre-market ascending triangle (7:30-8:00am ET) breakout.
So in the 15 mins from the NYMEX open, price is in a very ugly range, but finding buyers at every touch to the 102.70-102.80 zone. Price closed just below the 20 EMA a couple times. Earlier triangle congestion becomes support in a clear pre-market uptrend.
The R:R of a short break of 102.75 is negative: there's internal double bottom support @ 102.60 and buyers will likely give that a good test, and a 20-tick stop is likely not survivable due to the volatility lately.
The R:R of a long break of 103.07 (9:15 ET bar high) is excellent: the previous high is 50 ticks away and a break of 103.07 is already a break of previous 103.01 support becoming resistance, so that bearish scenario is out of the way.
I want to go long a break of 103.07, but I also want to enter with a more clearly defined stop zone, not too keen on a 34-tick stop below 102.75. So I wait for the initial break, now watching the 1-min chart for a more precise entry.
Price breaks 103.07 very weakly, then pulls back a little, but only to 102.93, leaving a 1-min bar with a high of 103.07. Perfect second mouse entry setup! I place my order to go long @ 103.08 and my protective stop @ 102.92, well within my 20-tick max stop parameter. I'm slipped into the trade @ 103.09 with no plan to take profit until a) a reversal signal appears or b) price either breaks the previous high or finds resistance just prior to the previous high. There's a key level @ 103.49, the high of the bar just after high was hit. There could be a lot sellers waiting to put on a low-risk short there with a very tight stop, driving price back down off a lower high which could then attract more sellers.
My management strategy is to wait for around 20 ticks profit before moving my stop to b/e, then to tighten my stop considerably as price nears 103.49, expecting momentum to break out the high, or sellers pouncing just before the test of the high. If price hadn't sold off so hard post-NYMEX and hung out below the 20-EMA for so long, I'd consider a breakout of the high to be a no-brainer, but I'll exercise more caution in this instance.
So I'm long @ 103.09 and price immediately moves a few ticks my way, then pulls back. This is a normal wiggle that you don't see when you look at the static 5-min chart. But reality is that price wiggles, showing you green, then almost always showing you red again before continuing (except on pure breakouts). A break of 103.24 is key and once that breaks, I move my stop to b/e.
Price again wiggles here. This is where nervous traders grab their 15-20 ticks, call it a trade, then whine when it runs further without them.
But there are key levels still cleanly in play and no reversal signal. We have 103.40, 103.49 and then the high.
103.40 breaks straight to 103.49 and sure enough, the sellers jump on it. I decide to lock in 30 ticks profit because price couldn't even break 103.49 by a tick. I'll look to re-enter long at 103.50 for the break, but that doesn't happen and I end up shorting 103.25 for, at minimum, a scalp down to the 20-EMA, maybe more.
If you look at the 1-min chart between 9:36 and 9:39am ET, you'll see how much price wiggles following the 103.26 bar break entry. It dips a few ticks, moves back up to .33 but doesn't hit my .41 stop, back down to .16, then up to .27 (where I'd be shaken out if I moved my stop already), then right on through the 20-EMA where I then tighten my stop to lock in my 20 ticks in case 102.93 fails to break.
I was not trading oil in 07 but that 7 month decline is absolutely stunning...I wonder if anyone had the gall to go short at 147 and stay short for those 7 months!!! They wouldn't be on ET now I assume....
excellent post
I am 50% technical, 50% fundamental.but fundamental analysis first, technical second.
when I woke up at 5:00am (New york Time) ,saw crude at 102.5ish, shorted at 102.54 , why ? first I thought 103.03 is their target kiss, and thursday's move made me think that is what the market wants (the market always shoots a new high, then drifts down, or a bull trap, lock bulls into buy dip mode)
20%time after I entered, I am green, the maimum is around 18ticks(down to 102.36), 80%time I am red, maximum against me is 24ticks (6:00am sudden burst to 102.78), based on this information, plus the volume inthose sudden move, I judged I entered short in an up trend consolidation zone or a bear trap, I toke a little loss at 102.67, and reversed there, then put a stop at 102.2, put a limit order at 105, left the market until almost closing 1:40PM new york time (often crudewill be traded wildly after 2:00PM), I noticed the market suddenly went down to 103.62, but I noticed there is no vlume there, I felt it is safe to hold. fundamentally I think bulls will not get out because they may think libiya's unrest may not suddenlydisaapre over weekend, the reality in most traders'mind is they believe the unrest will be a while weeks or months, even will escalate or spread to other middle east counties, the potential for crude price continuous surge is pretty high. the 103.62 drop with no volume confirmed my judgement (some timid sheep out there, some brave bears may short into the dip). bears are definitely trapped, they are desperate to get out,but they cannot, afraid of the weekend new development in unrest, those late bears (they thought crude is overbough or they thought before closing bull profit taking) not majority trapped in the AH session.
I am 50% technical, 50% fundamental.but fundamental analysis first, technical second.
when I woke up at 5:00am (New york Time) ,saw crude at 102.5ish, shorted at 102.54 , why ? first I thought 103.03 is their target kiss, and thursday's move made me think that is what the market wants (the market always shoots a new high, then drifts down, or a bull trap, lock bulls into buy dip mode)
20%time after I entered, I am green, the maimum is around 18ticks(down to 102.36), 80%time I am red, maximum against me is 24ticks (6:00am sudden burst to 102.78), based on this information, plus the volume inthose sudden move, I judged I entered short in an up trend consolidation zone or a bear trap, I toke a little loss at 102.67, and reversed there, then put a stop at 102.2, put a limit order at 105, left the market until almost closing 1:40PM new york time (often crudewill be traded wildly after 2:00PM), I noticed the market suddenly went down to 103.62, but I noticed there is no vlume there, I felt it is safe to hold. fundamentally I think bulls will not get out because they may think libiya's unrest may not suddenlydisaapre over weekend, the reality in most traders'mind is they believe the unrest will be a while weeks or months, even will escalate or spread to other middle east counties, the potential for crude price continuous surge is pretty high. the 103.62 drop with no volume confirmed my judgement (some timid sheep out there, some brave bears may short into the dip). bears are definitely trapped, they are desperate to get out,but they cannot, afraid of the weekend new development in unrest, those late bears (they thought crude is overbough or they thought before closing bull profit taking) not majority trapped in the AH session.
March 6 Libyan events, my comments on <<< >>>
http://www.cnn.com/2011/WORLD/africa/03/06/libya.conflict/index.html?hpt=T1
Libyan Opposition
---------------------------
Opposition-controlled radio announced Saturday that the country's sole legitimate representative was now the National Transitional Council, a group with 31 representatives for most of the regions in Libya.
The council held its first meeting Saturday in the eastern city of Benghazi. It called Benghazi its temporary location until the "liberation" of the capital, according to a decree the council issued late in the day.
Former Justice Minister Mustafa Abdeljeleel, whom the council said had tried to resign from Gadhafi's government several times, was announced as the council's new leader.
The council also named a representative for military affairs and established a military council to oversee the "liberation" of Libya and reconstruct the armed forces, according to the radio announcement.
The council said its main missions are
- to represent all of Libya internationally,
- liberate the country,
- draft a constitution and
- hold elections.
<<<<
a/ this formation of 31 representative National transitional council is great first step. With this opposition has a face and an entity to make one voice request to UN to stop gaddafi Air rides.
b/ this entity also gives a chance for US and EU cut officially cut diplomatic ties with gaddafi Govt. as step 1 , then as step 2 announce recognition of Libya with this group. Step 1 may happen some time in the coming week.
( I guess US/EU diplomats must have helped opposition to unite and form this group )
c/ off course gaddafi govt will focus to dismantle this group asap with tanks etc.. Once the word spread about this council group and get more international support this put end of gaddafi govt.
d/ now I guess gaddafi govt. will fight firacly to take back cities , I guess next 1 week is going to be intense fighting.
e/ next friday is 'day of Rage' Saudi protesters Face book initiated protest day
>>>>
Libyan Govt.
-------------------
Tripoli, Libya (CNN) -- Throngs of people took part in a boisterous demonstration Sunday supporting Libyan leader Moammar Gadhafi and insisting that the government had triumphed in recovering key Libyan cities, despite witness accounts that the opposition maintained control in some of those sites.
In the eastern Libyan town of Misrata, a fierce battle was under way Sunday, as people seeking an end to Gadhafi's 42-year-rule fought his heavily armed forces.
Media reporting
-----------------------
"People are willing to die for the cause," a witness told CNN, describing them as "fearless" and "amazing." The rebels are using machine guns or, in some cases, just sticks to fight off pro-Gadhafi forces who use tanks and heavy artillery.
Even as the witness described the heavy fighting under way, pro-Gadhafi demonstrators in the capital of Tripoli said they were celebrating the government's victory in Misrata.
Libyan state TV said Sunday the people in Green Square were also celebrating the army gaining control of the eastern port city of Tobruk. "Morning victory, oh people of Libya. Victory city of Tobruk from terrorist gangs," the station said.
Witnesses in Tobruk said those towns were still under opposition control.
Gadhafi seemed to be "building up expectations," making promises of victory to create an impression that the government was making head way, CNN's Nic Robertson reported from Tripoli.
World watching Libya Migrant workers fleeing the fighting in Libya Libya's road to democracy Libya resident describes fighting
The witness in Misrata told CNN that people there reported Gadhafi's forces using six tanks to combat the opposition. The tanks fired rockets at the courthouse, which the opposition was using as its center of operations, and black smoke could be seen rising from the building, the witness said.
He spoke to CNN amid a gunbattle between pro-Gadhafi militias and the opposition, he said.
CNN has not been identifying the witnesses for their safety.
http://www.cnn.com/2011/WORLD/africa/03/06/libya.conflict/index.html?hpt=T1
Libyan Opposition
---------------------------
Opposition-controlled radio announced Saturday that the country's sole legitimate representative was now the National Transitional Council, a group with 31 representatives for most of the regions in Libya.
The council held its first meeting Saturday in the eastern city of Benghazi. It called Benghazi its temporary location until the "liberation" of the capital, according to a decree the council issued late in the day.
Former Justice Minister Mustafa Abdeljeleel, whom the council said had tried to resign from Gadhafi's government several times, was announced as the council's new leader.
The council also named a representative for military affairs and established a military council to oversee the "liberation" of Libya and reconstruct the armed forces, according to the radio announcement.
The council said its main missions are
- to represent all of Libya internationally,
- liberate the country,
- draft a constitution and
- hold elections.
<<<<
a/ this formation of 31 representative National transitional council is great first step. With this opposition has a face and an entity to make one voice request to UN to stop gaddafi Air rides.
b/ this entity also gives a chance for US and EU cut officially cut diplomatic ties with gaddafi Govt. as step 1 , then as step 2 announce recognition of Libya with this group. Step 1 may happen some time in the coming week.
( I guess US/EU diplomats must have helped opposition to unite and form this group )
c/ off course gaddafi govt will focus to dismantle this group asap with tanks etc.. Once the word spread about this council group and get more international support this put end of gaddafi govt.
d/ now I guess gaddafi govt. will fight firacly to take back cities , I guess next 1 week is going to be intense fighting.
e/ next friday is 'day of Rage' Saudi protesters Face book initiated protest day
>>>>
Libyan Govt.
-------------------
Tripoli, Libya (CNN) -- Throngs of people took part in a boisterous demonstration Sunday supporting Libyan leader Moammar Gadhafi and insisting that the government had triumphed in recovering key Libyan cities, despite witness accounts that the opposition maintained control in some of those sites.
In the eastern Libyan town of Misrata, a fierce battle was under way Sunday, as people seeking an end to Gadhafi's 42-year-rule fought his heavily armed forces.
Media reporting
-----------------------
"People are willing to die for the cause," a witness told CNN, describing them as "fearless" and "amazing." The rebels are using machine guns or, in some cases, just sticks to fight off pro-Gadhafi forces who use tanks and heavy artillery.
Even as the witness described the heavy fighting under way, pro-Gadhafi demonstrators in the capital of Tripoli said they were celebrating the government's victory in Misrata.
Libyan state TV said Sunday the people in Green Square were also celebrating the army gaining control of the eastern port city of Tobruk. "Morning victory, oh people of Libya. Victory city of Tobruk from terrorist gangs," the station said.
Witnesses in Tobruk said those towns were still under opposition control.
Gadhafi seemed to be "building up expectations," making promises of victory to create an impression that the government was making head way, CNN's Nic Robertson reported from Tripoli.
World watching Libya Migrant workers fleeing the fighting in Libya Libya's road to democracy Libya resident describes fighting
The witness in Misrata told CNN that people there reported Gadhafi's forces using six tanks to combat the opposition. The tanks fired rockets at the courthouse, which the opposition was using as its center of operations, and black smoke could be seen rising from the building, the witness said.
He spoke to CNN amid a gunbattle between pro-Gadhafi militias and the opposition, he said.
CNN has not been identifying the witnesses for their safety.
Thanks for the monthly chart. Not quite as parabolic just yet as that move to 147. But if you look at it, that move looks possible. Will it make that move? Stay tuned.
http://www.elitetrader.com/vb/attachment.php?s=&postid=3112867
I always use this example when I'm trying to explain to people some possibilities of trading futures.
I tell them that crude oil spiked up to $147 in 2008 and then 7 months later sold off to $32 per barrel. If you shorted 10 contracts at the high and didn't even trade it, but just held it and covered at the low this would be a 115 point move.115 points x 10 contracts = 1150 points
1150 points x $1000 per point = $1,150,000
And you wouldn't even need that much money to put on the original trade.
I had my short order in at 148 and just missed being filled and predicted it would drop to 33. I was a little off...................... kidding
this is exactly what is hindsight bias :- )
even today such opportunities exits , examaple stocks 'Block Buster' if you shorted 7 months ago , ' Circuit city ' stock same case few year ago .
Every year there is potential for 100 companies to go bankrupt but only 10 companies goes bankrupt , you do not know which one go, but is easy only in the hindsight ...
even today such opportunities exits , examaple stocks 'Block Buster' if you shorted 7 months ago , ' Circuit city ' stock same case few year ago .
Every year there is potential for 100 companies to go bankrupt but only 10 companies goes bankrupt , you do not know which one go, but is easy only in the hindsight ...
Quote from BCE:
I always use this example when I'm trying to explain to people some possibilities of trading futures.