How can this oil hedge fund giant lose so much when October was an easy short trade?
- Thread starter learner88
- Start date
Dude, that's exactly what I said - "outright have more capacity, but it's harder to find alpha"
To be honest, people who have a strong call on the outright market beyond really short time frames are very hard to find.they don't know to read a chart
Can we see your short OIL gains YTD?
As stated in the original opening post, I have negligible experience in trading oil. I did not profit from shorting CL. I am not skilful at all.
I did not start this thread to gloat over the misfortune of someone who is smarter, more experienced. I am curious how these more competent players can lose money when I think I could have lost less if placed in the same situation. I want to learn from his experience. I honestly don't think I will lose 20% from a single play within a month based on what I see from the CL oil price chart. THere were no big surprise gaps. Even if an experienced player does not make money shorting, he should at least have gotten out with lesser losses because I expect that from his risk management.
Experience looking at charts in no way shape or form should be remotely compared to trading live.
All charts look obvious. I couldn’t begin to venture a guess as to how many newbies I’ve seen over the years who were great with charts but made horrible traders. Risking real money changes everything. Every trade I’ve ever put on - I could find fault with. Technically, Fundamentally... there’s never absolute perfection. I can’t remember the last time I put on a trade, took no heat on it, and it ran wildly in my favor.
And taking a 20% drawdown in a month on flat price risk - especially in the energy sector, isn’t unheard of. John Arnold, who ran Centaurus (one of if not the most successful energy hedge fund) in fact took a 30% monthly drawdown on Nat Gas early in that fund’s infancy I seem to recall.
I’m not being critical of you personally or your posts - it’s a great thread and I thank you for it.
In what way, mentally or other factors kick in?
1. Uncertainty. Take the run up in CL that the poster proclaimed was an “easy short”. From July until the first of October CL F19 ran from $46 up to $76 and change. Let’s say you took a short the second or third week in October - it was by no means apparent at that point that the market was going to fall off the face of a cliff. You would have been well within the previous few week’s established trading range and you would have been taking some heat as the market moved up and down during normal trading as ALL markets do. People were still talking about $100 oil. You would have had plenty of loathing and self-doubt as you watch your position mark up, mark down, mark up, mark down... Unfortunately - markets do not move in a straight line up or down. You are short in the face of an extended run-up... plenty of technical and fundamental reasons to doubt yourself at that point in time. But of course well after the fact late in November it all seemed so obvious !
2. Personal Risk Tolerance. This is where the emotions of a position marking against you really starts to take an emotional toll. Self doubt can lead to self sabotage. Emotions can destroy the best designed trading systems.
I'm not convinced by this. I was stopped out of my long on Brent on 23/10, when price plunged to close below the 50EMA and forced the average to turn downwards. Even without a fixed stop, I would have exited on these two features coinciding.
From the point when price and the 20EMA are below the 50 and the 50 is sloping downwards, that's a downtrend.
The earliest I would have got into this short with my current TA would have been 24/10 but more probably 30/10, 31/10 or 01/11. With a conventional stop-loss of 2ATR20, I don't think I would have been stopped out of that short even yet.
Did you initiate a fresh short on the downturn ?