Duxon's Journal on Trading Metals

[expiated]

Compare the opinions you expressed in the paragraphs below with these that you wrote over the weekend and attached to Post #47.

"FINAL" SUMMARY | VOLUME II

Over the long haul, from an intraday perspective, you want to be trading crude oil in agreement with the gist of the directional tendency displayed by a consensus of the 30- and 60-minute price flows. Nonetheless, it is the mingled trajectory of the six- and 16-minute channels that actually accumulates profit from a practical, day trading standpoint.

Natural Gas dictates that at least three trends be aligned before taking action: the 30-, 15- and six-minute price flows—and all the better if 60-second price action is running in the same direction. (So then, both crude oil and natural gas rely on the 30-, 15-/16- and six-minute measures, except crude oil leans on the slower measures overall, and natural gas the faster.)

When it comes to gold, it is the 15-minute flow that generates profit (similar to crude oil and natural gas), though comprised of extremely erratic four-minute and 60-second price action, and confirmed by a seriously lagging 36½-minute baseline (once again, similar to oil and gas, though a little bit slower).

(Try adding a narrower 4¼-minute channel, that is, at 0.04% deviation, and using its upper and lower bands to pinpoint entry and exit levels.)

And as for silver, the 21-minute price range envelope constitute its "money trail" (unlike the first three assets), which is comprised of 4¼- and 8½-minute price action, and typically navigates the domain of a 51-minute price range envelope. (Gold also operates within the boundaries of a 51-minute envelope, and both tend to limit their typical price action to the 0.45% deviation level.)

Finally, we have the foreign currency pairs, which have a "unique" 26-minute money trail that is confirmed by a 60-minute price flow channel; all the while maneuvering within eight- and 12-hour price range envelopes—much slower and much wider than the domains of the above four commodities. (Crude oil more-or-less operates within one- and two-hour channels, whereas natural gas gallivants a 34-minute realm.)

 

[expiated]

MONDAY | MAY 6, 2024

In recording, memorizing and applying key NPP setting to trading the four commodities offered by NADEX, I've concluded that the "trick" to day trading these assets profitably lies in applying one to four of the following seven measures, depending on the asset in question:

1. 3½- to 4¼-minutes
2. 6 minutes
3. 8½-minutes
4. 10 minutes
5. 14¼ minutes
6. 20 minutes
7. 30 minutes

Therefore, to minimize confusion, I plan to adopt a uniform color code/scheme across all four, as follows:

• 3½- to 4¼-minutes = dark slate gray
• 6 minutes = saddle brown
• 8½-minutes = Indian red
• 10 minutes = yellow
• 14¼ minutes = dark sea green
• 20 minutes = beige
• 30 minutes = thistle

Additional useful measure include:

• 40 to 45 minutes = white
• 51 to 60 minutes = forest green
• 2 hours = red
• 3 hours = slate blue
• 4 hours = medium blue
• 8 hours = orchid

Key Forex Measures:

• 5-minutes
• 14¼ minutes
• 30 minutes
• 43 minutes
• 3 hours

 

[expiated]

From the "Different Business Model..." thread:

 

[expiated]

Nadex's pricing on gold and silver knock-outs:

 

[expiated]

THURSDAY | MAY 16, 2024

If gold’s 51-minute baseline is evidencing an obvious directional preference, chances are that price is not going to spend a substantial amount of time on the contrarian side of this measure and you should therefore enter positions accordingly.

The exception, however, is during periods of maximum fluidity/volatility—times in which this commodity makes a habit of swinging wildly. Under such circumstances, your best bet is to take advantage of mean reversion/regression toward the mean, as price is rejected at the 0.30%, 0.50%, 0.65% or 0.90% deviation level of the 51-minute price range envelope(s)—especially if candlesticks are simultaneously located on the contrarian side of a decidedly bullish or bearish three-hour baseline.

Similarly, natural gas’s eventual or ultimate longer-term destination is suggested by the slope of the markedly lagging four-hour baseline, so if the asset has not made a sudden, particularly rapid fully-fledged wholesale reversal, it is a relatively safe bet to enter pseudo swing trade-like positions on the contrarian side of this measure.

On the other hand, during periods of heightened fluidity/volatility, when the fuel has a tendency to "veer way off course," the distinctly different recommended tactic is to take advantage of mean reversion/regression toward the mean by entering positions as price is rejected in the vicinity of the 34¼-minute price range envelope at the 2% to 2½% deviation level and/or the four-hour price range envelope at the 4% to 4½% deviation level—especially if this coincides with the contrarian side of a clearly sloping four-hour baseline.

 

[expiated]

With crude oil, look for reversals to happen in the vicinity of the one to one-and-a-half percent deviation level of the three-hour price range envelope; and with silver, anticipate it taking place anywhere from the 0.70% level of the same measure to the 1½% deviation level of the 51-minute price range envelope.

 

[expiated]

Nadex's pricing on natural gas knock-outs:

Since there is a $7.00 spread on natural gas contracts, it would appear that Nadex assigns every thousandth of the price a value of $1.00.

 

[expiated]

FRIDAY | MAY 17, 2024

In simply glancing at four-hour charts, my eye favors tracking natural gas from a longer-term perspective using the five-day price flow, but the four-day price flow seems better suited for the other three commodities.

Natural gas uses a (five-day) price range envelope at 18% deviation, whereas crude oil and silver use not one, but TWO (four-day) envelopes—oil at 5% and 9.5% deviation, and silver at 6.5% and 10.75% deviation. Gold seems to only need one (four-day) envelope at 5% deviation.

In tracking these commodities more closely, natural gas, gold and silver make use of two-day measures; gold and silver in the form of a baseline, and natural gas in the form of a price range envelope at 10.5% deviation. This is not necessary with crude oil, because its daily price flow measure is much more definitive than that of natural gas, and is considerably more stable than the 24-hour measures on the gold and silver charts.

Actually, I use the same envelope at two different settings to track the daily price action of each of these asset’s (with the exception of silver)—the lower setting to define the more common range, and the higher to mark the typical boundaries of more radical price behavior. In the case of natural gas, I use nine-hour envelopes at 0.7% and 5% deviation. The other three commodities all use 24-hour envelopes, crude oil at 0.7% and 2.75% deviation, and gold at the exact same settings. (Silver uses a single daily price range envelope at 4.5% deviation.)

Based on these configurations, I would expect crude oil to fall over the next week or so from where it is now at around 79.56 to 79.80. The other three look to be on track to continue climbing.

 

[expiated]

How about a more detailed description of crude oil’s forecast model?

Oil has been vacillating between roughly 77.20 to 79.36 (on my Coiness MT4 chart) ever since last Wednesday (May 8th), making it neutral from a day-to-day standpoint. However, the hourly trend is bullish, which recommends buying it from an intraday perspective anytime price drops to around the 79.11 neighborhood. Nonetheless, caution is the name of the game, seeing as how candlesticks have crossed above a down-sloping four-day baseline. Consequently, if the asset breaks below 79.11, the odds are good that it might opt to resume a southbound trajectory, possibly all the way back down to at least around the 77.20 region.

 

[expiated]

How about a more detailed description of crude oil’s forecast model?

UPDATE: In drilling down to lower-time-frame charts, I’ve discovered that plotting a six-hour price flow channel at 1.2% deviation is helpful in terms of anticipating the ultimate or eventual direction of the intraday trend. More specifically, its associated baseline assists in recognizing major pullbacks in the intraday price flow (i.e., the 90-minute channel), and facilitates confirmation of fully-fledged intraday reversals in this same measure. It should therefore prove useful in determining if and when crude oil DOES actually resume a bearish intraday trajectory.