What makes a good oil trader and risk metrics

[Ironplates]

I am running a private trading operation and have a trader that is trading oil with me.

I would like to know from other traders here, if there are behaviors, mindset or otherwise to be aware of in making a decision about keeping the trader in the group.

The obvious factor is, are they making money?

A mindset that I like is: to make the most of opportunity and take it as long as the risk of the operation can handle it.

What is the best way to measure the amount of risk to take to trade oil in terms of number of contracts and stop limit size on a 15min, 1000 volume, 60 minute?

 

[ogarbitrage]

Are you trading the front month or spreads/flies?

 

[austinp]

Your question has too many variables to give defined answers

As an example, I trade 200-tick (or similar) speed charts targeting pullbacks in consolidations and/or breakouts from consolidations. I use a -10 cent (ticks) initial stop on all trades, no matter what.

Targeted gains are +40 to 100+ cents and that makes up the bulk of my exits, but sometimes trail out for +20 cents or so if price stalls on key levels and is spiky erratic acting. I can take four - five straight losses and one normal win in choppy markets, wind up scratch or slightly profitable.

That's trading in harmony with "trend" bias, so to speak. If your guy is a mean-reversion trader, i.e. tries timing turns off whatever levels is going to take a lot more heat than -10 cents. I assume with the slow charts you note there that he's trading pullbacks of some sort... breakouts on those charts won't work.

So the real answer is, nobody can really outline risk for you without knowing the parameters of said approach, assuming it has a real lasting edge to begin with.

 

[Ironplates]

Here is an example chart.

Trades front month contract, no spreads.

The trader uses corner median lines and trades the pull back to the line.

A stop of 8 ticks as long as structure is within the 8 ticks.

I think that is too tight a stop, it really requires a lot of perfection and am concerned it misses opportunity.

Periodicity is on a 60 min, 15 min, 240 min.

The trader uses the different periodicity for context, not sure if that is the distraction.

The target is the FIRST touch on the target median line (error on chart), and stops are moved up once a swing low has been defined 8 ticks beneath. If no swing low can be found the stop is moved to break even once a previous high is overcome or some resistance.