Duxon's Journal on Trading Metals

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For gold, silver, crude oil and natural gas, price action at the micro level can be more-or-less adequately represented using a baseline somewhere in the range of 8 to 10 minutes, and a price flow channel somewhere in the neighborhood of 20 to 23 minutes.

So then, I can basically standardize the four commodities offered by NADEX by plotting a 21- to 23-minute price flow channel on each, and a ten-minute baseline on crude oil and natural gas. (I didn't include silver and gold with respect to ten minutes because, generally speaking, the wobbliness of (all four of) these assets is discouraging me from trading them at the granular level, at least for the time being.)

Consequently, I will primarily be looking to trade crude oil in the direction of the slope of the 80-minute trend, entering positions as the six-, ten- and 23-minute price flows come out of pullbacks from the contrarian direction, most probably at the 40-minute statistical support/resistance level (as appropriate) and/or the 60-minute temporal support/resistance level.

I will also be looking to trade natural gas as the 10- and 23-minute price flows are coming out of pullbacks, except that this will occur at the 0.5%, 1% or 1.5% deviation level on either side of the "30-minute core" if its bias/sentiment is neutral; or the contrarian side of the 23-minute measure if the 30-minute envelope is trending.

In terms of the slower trend (the slope of the five-hour envelope) positions can be entered as the short-term trend is coming out of pullbacks:

• Near statistical support/resistance in the form of the contrarian band of the 30-minute envelope, or
• Off the two-hour temporal support/resistance level (as appropriate), or
• As the 30-minute price flow is coming out of pullbacks at the 2½-hour or five-hour statistical support/resistance levels.

Silver and gold, which do not necessarily sport a ten-minute baseline, need to be supplemented with a roughly 40- to 50-minute measure due to the fact that the amount of instability evidenced by the 23-minute channel means it cannot be fully trusted. In the case of gold, I'm currently using a 47-minute baseline, and with silver, I'm using a 51-minute price flow channel.

Silver basically offers two actionable scenarios:

1. For the first, I added an eight-hour core, and will enter and remain in long positions when price action is taking place above the core's upper band and the 23-, 51- and 120-minute measures are all bullish; or assume and stay in short positions as long as price action is taking place below the core's lower band and the 23-, 51- and 120-minute measures are all still bearish.
2. If silver's bias is neutral or nearly so, then I'll look to enter positions above or below the two- and/or four-hour statistical support/resistance levels.

Gold also has essentially two setups:

1. If the 3⅓-hour sentiment/bias is neutral, I'll look to enter positions following pullbacks to the corresponding statistical support/resistance levels as the 23- and 51-minute measures reverse course back toward the mean. (Caveat: It's permissible to use the 8½-minute flow instead in those instances where this measure is radically outpacing the 51-minute channel.)
2. If the 3⅓-hour price flow is trending, I'll enter positions as the trajectories of the 23- and 51-minute measures are reversing direction from a course opposed to the angle of the 3⅓-hour trend to forge a trail aligned with it, regardless of whether or not this is taking place at any designated support or resistance level.

 

[expiated]

So then, I can basically standardize the four commodities offered by NADEX by plotting a 21- to 23-minute price flow channel on each, and a ten-minute baseline on crude oil and natural gas.

Because I simply opened up the MT5 platform Sunday evening and began trading, without waiting for optimal market structure to enter positions, I had to basically employ a scalping mindset, just to test whether guidelines I developed over the weekend might possibly be on track, or if they were totally off base so that one or more of my positions would end up hitting my stop(s).

As it turned out, all three had profitable outcomes...

(I couldn't test silver because I'm still in a losing position I entered with regard to this asset on Friday, before I arrived at this weekend's conclusions, and am hoping to still possibly escape it with profit—God willing.)

If my calculations are correct, it looks to me like natural gas provides me with 10¢ for every 0.001 units of change, crude oil gives me approximately 7¢ for every 0.01 units of change, silver 10¢ for every single unit (1.0), and gold $1 for every unit.

 

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MONDAY | APRIL 15, 2024

Based on performance results from this morning, I believe I've wrapped up the process of optimizing NPP with respect to trading the commodities offered by NADEX (and don't really expect to have anything else to say on the topic).

Even with Friday's major error, silver is on the brink of turning breakeven and is teasing that it might even be willing to return a profit. Gold gave me another 0.28% worth of gains later this morning and both crude oil and natural gas illustrated that this weekend's forecast would have offered a much greater return had I sought more of a swing trade methodology rather than a scalping approach to these positions.

 

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NADEX doesn't have a weekly binary option for silver? (I don't see one at 11:30 AM PST.)

 

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Saturday | April 20, 2024
(Go back and compare what you're writing today with what you wrote last Sunday in Post #41.)

Similarities and Differences Between the Optimized Methodologies Applied When Trading Five Different Assets:

Forex is similar to gold in the sense that both rely on four- (gold) or five- (Forex) minute price action to suggest entry and exit levels as price is coming in and out of pullbacks and surges.

However, foreign currency pairs are able to do this using a ten-minute baseline as the primary, confirming and/or validating measure in tandem with a five-minute price range envelope at 0.03% deviation as the more granular and secondary measure for tracking the ebb and flow of rates as they navigate 26-minute price flow; whereas gold does it by using a 4¼-minute price range envelope at 0.04% deviation to track the ebb and flow of price as it navigates 21-minute price flow (not to mention the more stable 36½-minute price flow).

This makes gold similar to silver in that silver too uses an almost identical 37-minute measure (baseline) instead of a 36½-minute measure (envelope) to characterize or represent intraday price flow. But silver uses it to confirm or validate the apparent direction of the 23- (instead of 21-) minute envelope at roughly 0.20% deviation in tandem with the more stable 50-minute channel.

So to recap...foreign currency pairs define intraday price flow based on 26 minutes; whereas gold does it by seeking the counsel of 21 and 36½ minutes; while silver uses the consensus opinion of 23, 37 and 50 minutes. Moreover, currencies rely on the fluctuations of five- and ten-minute price action to pinpoint entry and exit levels; whereas gold looks to 4¼-minute price flow; and silver depends on the not-yet-mentioned 2¼-minute price flow channel at 0.04% deviation as it bobs up and down above and below a ten-minute baseline (making its interactions with the ten-measure different from the much "tighter" way that the five-minute fluctuations of currency pairs engage this same moving average).

Instead of a baseline, crude oil uses a ten-minute price range envelope at 0.20% deviation, in concert with the interplay of price above and below a six-minute price flow channel at 0.07% deviation which it typically engulfs, to suggest entry and exit levels as these two measures flow with or against the slopes of the 20-, 30- and 60-minute baselines (which highlights the similarities and differences it has with currency pairs and silver).

So finally, compare and contrast all this with natural gas, which uses the slope of a nine-minute baseline and its positional relationship with a 15-minute price flow channel at 0.20% deviation as its primary guides regarding actionable bullish or bearish bias/sentiment; with more granular moves monitored by the one-minute price range envelope at 0.10% deviation; the more stable and slightly longer-term price flow conveyed by the 30-minute channel at 0.5%, 1% and 1.5% deviation; and the typical limits of natural gas’ mostly insignificant yet frequent price fluctuations (and relatively infrequent/more substantive pullbacks) defined by the nine-minute price range envelope at 0.55% deviation.

 

[expiated]

So finally, compare and contrast all this with natural gas, which uses the slope of a nine-minute baseline and its positional relationship with a 15-minute price flow channel at 0.20% deviation as its primary guides regarding actionable bullish or bearish bias/sentiment.

Similar to foreign currency pairs and silver, which use a ten minute baseline; and crude oil, which uses a ten-minute price range envelope; and natural gas, which uses a nine-minute baseline; gold should also use an approximate ten-minute measure (or more specifically, an 8½-minute baseline) to confirm the sentiment/bias of short-term trends.

 

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SUNDAY | APRIL 28, 2024

Memorize these three paragraphs (except only the first sentence from the third paragraph applies). Then go back an make sure you can ALSO include all of the corresponding deviation levels...

 

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Monday | April 29, 2024 | 4:15 AM PST

Sunday night's scalping trades based on one-minute charts, and its "enter-your-positions-and-go-to-bed" trades based on the slopes of the one-, two- and 12-hour price range envelopes plotted on hourly charts—not to mention the locations/position of price within these envelopes—were all profitable (on this day at least)...

...which thus far argues for their continued use. In returning to the lower-time-frame charts to determine exactly what it was about the way in which they were used that led to profitable outcomes, the following "defining measures" emerged on my five-minute silver chart setup:

I will need to make sure I've correctly identified each one when I "wake up" later this morning, and clearly describe the role that each plays in interpreting this relatively helpful forecast model. As for gold, crude oil and natural gas, I'll have to postpone evaluating them in the same way until later today.

 

[expiated]

As for gold, crude oil and natural gas, I'll have to postpone evaluating them in the same way until later today.

My (supposed) fine tuning of gold, though I'm likely to modify the color scheme somewhat...

(The only thing crude oil required was my putting greater emphasis on one particular measure, and all I did with natural gas was clean up the graphics just a bit.)

 

[expiated]

All I did with natural gas was clean up the graphics just a bit.

I might have (probably) also placed more emphasis on the 15-minute price flow channel. I previously plotted a six-minute price flow channel on the chart because the one-minute trend was so unstable, which I deemphasized this morning. However, I came back just now and increased the deviation level on the channel up to 0.20% for the following reason...

If candlesticks violate the contrarian side of the channel at 0.20% deviation, you need to prepared to see the intraday trend possibly reverse direction (but not necessarily).

In short, you want to be trading in the direction of 15-minute price flow, but ONLY if this is in sync with the slope of the 30-minute channel, and ONLY if the six-minute measure is ALSO headed in the same direction (preferably when the one-minute flow is doing the same).

Again, the nine-minute price range envelope is on the chart merely to project likely "statistical" support/resistance levels, and as such, reasonable stops. However, to do this reliably, I had to up its deviation level from 0.55% to 1.00%.

Natural Gas