The ACD Method

justrading said:
You don't want to pick crosses generically, as you seem to want to do.

A crowded trade is crowded because the whole world sees it and jumps in, not because it is a particular symbol or cross. A strengthening USD and a weakening JPY was the obvious trade, but you could have traded those characteristics separately.

Re the Asian session for FX, don't waste your time unless you want to trade a data release, which I don't recommend. I start trading from the London open and usually call it a day mid way into the US session.

I live in Asia too, but I have the benefit of being a night owl. I used to live US hours, then with FX I switched to UK/US hours. If you can't manage that you could start trading at 1400 SG time and call it a day typically 0100 or so. If you've made enough, you could quit early, if you're managing a trade, you might have a late night. If you are the type who sleeps at 2000, I have no suggestions.
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Just curious, where do you live in Asia?
 
Maverick74 said:
The entire curve has flattened in WTI and Brent except the very front end. This is because producers are aggressively hedging their forward production in the swaps market. The tone is that they don't believe the cuts will hold so they are selling as much forward as they can and in turn have flattened the curve. Brent is tighter than WTI since we still have so much production from shale. The cost of moving those molecules from Cushing to the Gulf has gone up which can be seen in the HTT spread (WTI Cushing to Houston Ship Channel). The arb between WTI and Brent will be reflected in the marginal cost of moving molecules into the Gulf which prices more off of Brent then WTI.
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Mav, thank you. It seems there's a trade in bear CLV7-X7 if I expect the spread to go to full carry. With that said, bear spreads feel like selling options, it realistically can only go to full carry and we all know the old adage about pennies in front of a steamroller.....

On a side note, how did you get to that conclusion? I'm aware you are Lord Mav, but I wouldn't have come up with that thesis. Hell, I came up with no thesis which was why I posted here.
 
jj90 said:
Mav, thank you. It seems there's a trade in bear CLV7-X7 if I expect the spread to go to full carry. With that said, bear spreads feel like selling options, it realistically can only go to full carry and we all know the old adage about pennies in front of a steamroller.....

On a side note, how did you get to that conclusion? I'm aware you are Lord Mav, but I wouldn't have come up with that thesis. Hell, I came up with no thesis which was why I posted here.
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There is no full carry in oil like there is in grain. The spread value is governed by the marginal cost of storage which changes in real time.

Regarding my "thesis", it's been widely reported that producers have been selling the 17 and 18 strips aggressively to lock in the forward prices so they can borrow more capital to increase production. Their capacity to borrow is tightly tied to how much forward production they have already hedged. So they want to lock in low borrowing rates now to facilitate production and to do that they need to get as much of their reserves hedged as possible.
 
Maverick74 said:
There is no full carry in oil like there is in grain. The spread value is governed by the marginal cost of storage which changes in real time.
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What does a flat or inverted curve mean for storage then? There is too much storage out there/not enough production? I highly doubt it's the latter if producers are indeed hedging out on the back months.

Storage should also always be a positive number? Can't see where it would be negative, or 0 in normal contango markets(not 08). That would imply something. But what?
 
jj90 said:
What does a flat or inverted curve mean for storage then? There is too much storage out there/not enough production? I highly doubt it's the latter if producers are indeed hedging out on the back months.

Storage should also always be a positive number? Can't see where it would be negative, or 0 in normal contango markets(not 08). That would imply something. But what?
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You just walked into my wheelhouse. LOL. I did a paper on this. I'll tell you what, this is pretty complicated stuff. Over the holiday I'll do my best to summarize my research and explain this topic on here.
 
Maverick74 said:
You just walked into my wheelhouse. LOL. I did a paper on this. I'll tell you what, this is pretty complicated stuff. Over the holiday I'll do my best to summarize my research and explain this topic on here.
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What? you're still taking classes Mav?....what do they have to teach you?
 
koolaid said:
What? you're still taking classes Mav?....what do they have to teach you?
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Always learning. Never stop learning. Not taking classes. This business changes everyday. Whatever you learned last year is in the past. I still have a lot to learn as do we all.
 
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