15 replies to this topic

[hedgehawk]

I've learned quite a bit from watching folks trade here at TT and wanted to give a little back.

Black Gold, Texas T how do you extract money from the Crude Oil Markets? Simple, short the new highs! Although my top call was way off at 115, trading oil continues to be very profitable. I posted my P&L from the last 4 weeks so folks can see the results for themselves and to also provide this post some credibility. I did not post the ES trades as this is not about that but I made a little money there as well. The unique characteristic of crude is comparing the crude futures to the say ES futures is that I believe the crude futures are more forgiving. Due to the volatility, which I consider my friend, if you short the new high, chances are it will retrace and test that price point before continuing higher so you can get out and reload at the new high. The one thing that is very important to understand is your constraints and how to counteract them. For instance mine are a corporate firewall, a full time job, commuting 2 hrs a day back and forth from work, and lack of a real time news feed.......but I dont let those stop me.

Starting out I used the mini crude futures QM (500 barrels) then moved up to the CL (1000 barrels). Main diff besides doubling leverage is the volume where QM only trades 1/10 about 10K to 20K per day where the CL contract which trades like 200K per day. The price spread favors the CL.

Profit targets are .5 pnts or $500 on the CL. I put in a stop loss to lock in .5 pnts when I am in the money and walk it down following the play by .20-.35 pnts looking for $1K.

I will kill the play if order flow shows favor to buyers I cover at what ever price I am at for profit or loss. Obviously we are flat going into the Wed crude inv numbers due to the risk with a price spike.

The last piece is on stops.......I use mental stops on crude oil. There is a good amount of ebb and flow ie order imbalance so the crude futures can fluctuate .40 +/- just due to an imbalance of buyers and sellers at any particular moment.

These are the 10 variables I watch in aprox order of magnitude in determining how and when to trade crude oil.

1. 15 min chart of the USO via stock charts. Included below.........

2. Daily News - Excellent fade as generally these news spikes retrace within 24 to 48 hours.

3. Real time futures quotes of Gasoline, Heating Oil, Natural Gas, Gold and Silver. Looking for divergences..........

4. Real time currency quotes of USD, EUR, JPY and GBP. Looking for inverse strength here in the green back.

5. Pivot Points, Resistance and Support for June CL contract. Short targets are R1 and R2......You can use this link for Nymex pivot points or calc yourself:

http://www.allpivotp...mbol-CLM08.html

6. "Balance of Order Flow" for June CL futures contract. This is huge...........I posted a link to CBOT which has some info on it.

http://www.cbot.com/...0 40242,00.html

7. 13 and 34 EMAs on all time frames via Stock Charts. Seems to be very relevant.

8. Fib projection Targets via Stock Charts. I know you know how to do this.

9. I use previous reversal points 15 min chart using CCI, MACD, ADX, RSI, BB at 20,3 settings and ATR for relevant the 15 min time frame. Chart posted.

10. Wykoff schematic for spotting distribution - Excellent road map for finding areas or timeframes of weakness. Ive posted it before and attached it again.


http://stockcharts.c...97098&r=339.png

Attached Files

•  MTWyckoffSchematics.pdf   1.12MB   89 downloads

[SemiBizz]

Hi, I can't read your posts. the text gets stretched to 2X size, can't you do something about shrinking these charts? I'd like to comment, especially since I expect 122 next week on crude.

[hedgehawk]

Here is a 900 stock chart. The jpegs of the P&L not sure what to do there I am on a 22" HP monitor not sure if that has something to do with the 2x text. Ive checked it from my work in previous instances and the text looked ok. If anyone has any ideas on how I can make my post(s) more readable please let me know....


http://stockcharts.c...97098&r=468.png

[mss]

Nice work and a very useful and interesting post. Thanks for sharing your work. mss

[espresso]

On my screen is fine! No 2x or problems... Thanks for posting. PS Wait! Yes there is a problem, to read i need to scroll it horizontally!

Edited by Espresso, 26 April 2008 - 12:53 PM.

[SemiBizz]

For handy reference...

http://www.ltg-tradi...yckoff Wave.pdf

You can print this out and put it on your trading bulletin board ...

[SemiBizz]

Now, let's look at your trading strategy. Basically we think alike. What you would like to do is to make the most money in the shortest amount of time rake it in to your cash account and wait for the next setup... You'd rather not be subject to these strong pullbacks, so what you do is a countertrend trade crude short. Sharp, short turn trade. A bull who puts his money down at the lows and rides them will most likely outperform you, but not on the risk side of the equation. And you may just get lucky and him unlucky when the parabola finally pukes... and when it does, we know we're going to get 100% move down of the last rally segment. That's tough to stomach if you are a long term committed bull. Now, with respect to your ES shorting, you see it's a reverse animal. Primary trend until proven otherwise is down, and going long the short-term bear rally spikes are the order of the day, for low risk. Overall, it appears you would like to do what I do - which is to look for low risk, high reward, quick turn trades. Make any sense?

[U.F.O.]

This Wyckoff chart looks a lot like $INDU daily right now. (1 chart)

U.F.O.

[SemiBizz]

Out of all the trading signals we get from indices in the market, the one you should LEAST TRUST is the DJIA.... It is only 30 stocks.

[U.F.O.]

I just picked it because it happened to be on my MetaStock at that particular moment. I'm sure most any of the major indices would generate a similar answer. Are you saying charting $INDU has no validity whatsoever? U.F.O.