I won't be posting while I'm gone so feel free to have a look through the blog archives. I have moved them up just to the right of this post.
They are all brilliant I'm sure. :)
So instead of looking at charts all day I will be looking at this.
6/26/2008
Vacation
I am taking a month off, returning to work July 29. As I leave we have crude oil making new all time highs so it will be interesting to see where it is in a month.
I won't be posting while I'm gone so feel free to have a look through the blog archives. I have moved them up just to the right of this post.
They are all brilliant I'm sure. :)
So instead of looking at charts all day I will be looking at this.
I won't be posting while I'm gone so feel free to have a look through the blog archives. I have moved them up just to the right of this post.
They are all brilliant I'm sure. :)
So instead of looking at charts all day I will be looking at this.
Oil rises past $140 a barrel
NEW YORK: "Oil futures rose to more than $140 a barrel, a new record, Thursday after OPEC's president said oil prices could rise well above $150 a barrel this year and Libya said it may cut oil production."
(click on the read more icon for the full International Herald Tribune story)
read more digg story
(click on the read more icon for the full International Herald Tribune story)
read more digg story
Crude Oil Trades Over $140
Crude oil exploded out the gate this morning with a nice run and then wound up the day with a run over $140.
This should keep the politician's tongues wagging for a while.
13 Tick Range Bar Charts (click on charts to view)
This should keep the politician's tongues wagging for a while.
13 Tick Range Bar Charts (click on charts to view)
6/25/2008
Trading Crude Oil
The market was anticipating a build up of crude oil inventory this week as refiners are not all that keen on buying $136 oil. They cannot sell the refined product at a decent profit.
That's right, the price of gasoline should actually be higher based on the price of crude oil.
Why isn't it?
Count the number of gas stations in your neighborhood. There are simply too many and the competition is fierce. They really only make money selling all the "junk" in the store, not by selling gasoline.
Anyway back to the trading, in this case the pre inventory report guessing was correct as the price just kept falling after the report was released.
Nice day to trade.
That's right, the price of gasoline should actually be higher based on the price of crude oil.
Why isn't it?
Count the number of gas stations in your neighborhood. There are simply too many and the competition is fierce. They really only make money selling all the "junk" in the store, not by selling gasoline.
Anyway back to the trading, in this case the pre inventory report guessing was correct as the price just kept falling after the report was released.
Nice day to trade.
6/24/2008
Oil is an easy target
I am getting very tired of the constant barrage of terror being levied at the oil companies these past few months.
The carbon case for global warming seems to be the lead terrorist in this assault, but now we have the rather bizarre claim that the oil companies are the cause of high gas prices.
This type of "logic" is truly frightening as it exposes the ignorance of anyone who stands any where near this claim.
Imagine life with out oil. Imagine the cost.
The Rainbow Warrior can no longer set sea, Al Gore can no longer fly to his $200,000 dinner speaking engagements, David Suzuki can no longer drive his bus across Canada, you cannot heat your home, your lights don't come on, the car has no fuel, all plastic materials are gone.
Think.
The case to find alternatives is clear, as oil is finite. However while that journey is in progress if you have any economic sense at all, the case to find and produce all the oil we can is also clear.
Click on the read more icon to read Gwyn Morgan's take from his Globe and Mail column.
"My talk focused on a favourite topic - values based leadership. Halfway through the Q&A session came the question ... how could I credibly espouse ethical values given my career in the oil and gas industry?"
read more digg story
The carbon case for global warming seems to be the lead terrorist in this assault, but now we have the rather bizarre claim that the oil companies are the cause of high gas prices.
This type of "logic" is truly frightening as it exposes the ignorance of anyone who stands any where near this claim.
Imagine life with out oil. Imagine the cost.
The Rainbow Warrior can no longer set sea, Al Gore can no longer fly to his $200,000 dinner speaking engagements, David Suzuki can no longer drive his bus across Canada, you cannot heat your home, your lights don't come on, the car has no fuel, all plastic materials are gone.
Think.
The case to find alternatives is clear, as oil is finite. However while that journey is in progress if you have any economic sense at all, the case to find and produce all the oil we can is also clear.
Click on the read more icon to read Gwyn Morgan's take from his Globe and Mail column.
"My talk focused on a favourite topic - values based leadership. Halfway through the Q&A session came the question ... how could I credibly espouse ethical values given my career in the oil and gas industry?"
read more digg story
6/22/2008
Oh to be Rich and Smart
Saudi Arabia Hosts Energy Summit
In the world of oil and politics Saudi Arabia is the King to whom the rest of the world bows. At the recently concluded energy summit the Arabian Kings graciously announced they would increase oil production to 9.7 million barrels per day to help alleviate the current high price of crude oil.
The question is did they say it with a straight face?
The answer is, of course they did.
As I said they are rich and smart.
Let's do some math. 9.7 million barrels of crude oil per day times $135 per barrel is $1,309,500,000 in revenue per day.
Now for the advanced math, $1,309,500,000 times 365 days is $477,967,500,000.
478 billion dollars per year.
At the end of the "summit" the Saudis pat the Americans, Japanese, and British on the head and send them home.
Wouldn't you, if you were rich and smart?
(some pics and quotes from the summit via the globe and mail)
http://www.theglobeandmail.com/servlet/story/RTGAM.20080622.woilmeeting_gallery0622/PhotoGallery01?slot
http://www.theglobeandmail.com/servlet/story/RTGAM.20080622.woilmeeting0622/BNStory/energy/home
In the world of oil and politics Saudi Arabia is the King to whom the rest of the world bows. At the recently concluded energy summit the Arabian Kings graciously announced they would increase oil production to 9.7 million barrels per day to help alleviate the current high price of crude oil.
The question is did they say it with a straight face?
The answer is, of course they did.
As I said they are rich and smart.
Let's do some math. 9.7 million barrels of crude oil per day times $135 per barrel is $1,309,500,000 in revenue per day.
Now for the advanced math, $1,309,500,000 times 365 days is $477,967,500,000.
478 billion dollars per year.
At the end of the "summit" the Saudis pat the Americans, Japanese, and British on the head and send them home.
Wouldn't you, if you were rich and smart?
(some pics and quotes from the summit via the globe and mail)
http://www.theglobeandmail.com/servlet/story/RTGAM.20080622.woilmeeting_gallery0622/PhotoGallery01?slot
http://www.theglobeandmail.com/servlet/story/RTGAM.20080622.woilmeeting0622/BNStory/energy/home
At Oil Conference, Saudis Offer Slight Rise in Production
Ali Haider/European Pressphoto AgencyKing Abdullah of Saudi Arabia at the energy summit meeting in Jidda.
An energy meeting in Saudi Arabia underscored how few options the world has to push oil prices down from their record levels.
read more | digg story
6/19/2008
China Sharply Raises Energy Prices
"China is faced with increasingly severe fuel shortages for truckers and farmers and the prospect of blackouts during the summer air conditioning season."
Click on the read more icon for the full NY Times story.
read more | digg story
Click on the read more icon for the full NY Times story.
read more | digg story
Oil Speculators Drive Down Crude Oil Price
I couldn't resist.
My theory that the main reason for the price of crude oil is the threat to supply due to the conflict in the Middle East saw the reverse side of the equation play out today.
A threat to demand.
China announced that they are raising the price of gas, with the thought being the higher price would drive down demand.
Crude oil can go down.
China controls the price of energy by subsidizing their refiners who have to pay the world's market price for crude oil, refine it into gasoline, and then sell it at the Chinese government's dictated price.
This is costing the Chinese government billions of dollars and artificially inflates demand for energy as the real cost is not seen in the Chinese market place.
All in all it made for a great trading day in the crude oil market.
13 Tick Range Bar Charts (click to view)
My theory that the main reason for the price of crude oil is the threat to supply due to the conflict in the Middle East saw the reverse side of the equation play out today.
A threat to demand.
China announced that they are raising the price of gas, with the thought being the higher price would drive down demand.
Crude oil can go down.
China controls the price of energy by subsidizing their refiners who have to pay the world's market price for crude oil, refine it into gasoline, and then sell it at the Chinese government's dictated price.
This is costing the Chinese government billions of dollars and artificially inflates demand for energy as the real cost is not seen in the Chinese market place.
All in all it made for a great trading day in the crude oil market.
13 Tick Range Bar Charts (click to view)
6/18/2008
If at first you don't suceed
Barrel counting day is usually a great day to trade crude oil. I had no trades before the news and waited for the market to settle down a little after the 8:35 MST U.S. Department of Energy oil inventory report.
The news was fairly benign and the market did not launch one way or another to any great degree. I started getting signals and initiated a couple of trades that were stopped out quickly. Between 8:45 and 9:21 I had 5 trades, 4 stop outs and 1 break even.
What to do?
I may have mumbled some bad things, shut down the charts, and then went and bought a coffee.
With some sober second thought made a decision to wait until after the New York lunch hour and then come back to the market and see what happens.
So the first chart below shows the action around the first 5 trades and the second chart shows the action around the next 7.
Needless to say the trading went a lot better in the my "after coffee" trading session.
While I did turn a losing day into a winner I could have also just added to the losses. The key was to STOP for a while, clear my head, and come back to the market without the revenge trading attitude.
Trading is hard.
Click on chart to view
After coffee trading
The news was fairly benign and the market did not launch one way or another to any great degree. I started getting signals and initiated a couple of trades that were stopped out quickly. Between 8:45 and 9:21 I had 5 trades, 4 stop outs and 1 break even.
What to do?
I may have mumbled some bad things, shut down the charts, and then went and bought a coffee.
With some sober second thought made a decision to wait until after the New York lunch hour and then come back to the market and see what happens.
So the first chart below shows the action around the first 5 trades and the second chart shows the action around the next 7.
Needless to say the trading went a lot better in the my "after coffee" trading session.
While I did turn a losing day into a winner I could have also just added to the losses. The key was to STOP for a while, clear my head, and come back to the market without the revenge trading attitude.
Trading is hard.
Click on chart to view
After coffee trading
Bush Will Seek to Drop a Drilling Ban
"Reversing a longstanding position, President Bush will call on Congress to end the ban on offshore oil drilling, underscoring how gas prices have become a major issue in the 2008 campaign."
How to lower the price of oil?
Price is high, demand is high, supply is low.
Hmmmm.
Click on the read more icon for the full NY Times story.
read more | digg story
How to lower the price of oil?
Price is high, demand is high, supply is low.
Hmmmm.
Click on the read more icon for the full NY Times story.
read more | digg story
6/16/2008
Crude Oil Hits New High
Ho hum another day in the crude oil market.
Crude oil came out of the gate before the NYMEX floor open and took a run at $140, it came close with a intra day high of $139.89.
The NYMEX session was choppy until a nice run down in the afternoon. It's days like this that reinforce the , hold no directional biases, theory for day trading.
You wait for a direction to form, then a trend in that direction, and finally momentum in the trend direction for an entry.
Pre market move (click on chart to view)
Afternoon short move
Crude oil came out of the gate before the NYMEX floor open and took a run at $140, it came close with a intra day high of $139.89.
The NYMEX session was choppy until a nice run down in the afternoon. It's days like this that reinforce the , hold no directional biases, theory for day trading.
You wait for a direction to form, then a trend in that direction, and finally momentum in the trend direction for an entry.
Pre market move (click on chart to view)
Afternoon short move
6/11/2008
Senate Republicans Defeat Oil Windfall Tax Measure
Dear Communists:
We the Democratic senators wish to apologize for those nasty hearings way back when. They were all the Republicans idea anyway. We have seen the error of our ways and now wish to embrace your political and economic way of life.
Yes we are somewhat concerned with the North Korean, Cuban, and Russian standard of living but we are willing to make sacrifices in order to ensure no oil companies make billions of dollars.
By the way before we commit fully to this new, we are all equal, way of life what is the price of gasoline in North Korea?
While your checking on that we will continue to ensure there is no drilling for oil on the ice or the water around here, and keep trying to convince those idiot Republicans to take the oil companies money and .. uh.. build windmills to .. ah.. lower the price of gasoline.
Thank you.
For the real Bloomberg story click on the read more icon.
read more | digg story
We the Democratic senators wish to apologize for those nasty hearings way back when. They were all the Republicans idea anyway. We have seen the error of our ways and now wish to embrace your political and economic way of life.
Yes we are somewhat concerned with the North Korean, Cuban, and Russian standard of living but we are willing to make sacrifices in order to ensure no oil companies make billions of dollars.
By the way before we commit fully to this new, we are all equal, way of life what is the price of gasoline in North Korea?
While your checking on that we will continue to ensure there is no drilling for oil on the ice or the water around here, and keep trying to convince those idiot Republicans to take the oil companies money and .. uh.. build windmills to .. ah.. lower the price of gasoline.
Thank you.
For the real Bloomberg story click on the read more icon.
read more | digg story
Dual Time Frame Trading
Some questions on the 2 time frame trading I was talking about yesterday arose. So I will post some entries showing the bar that I entered on the 34 tick range bar chart and the actual entry bar on the 13 tick range bar chart.
I had 11 trades today and a couple of orders that didn't get filled, so it was a busy day. I don't want to (and you don't want me to) post 22 charts so I will post a winner, and a loser.
Again, I want to see the signal triggered on the 34 chart first then look to the 13 chart to find an entry point.
One of the no fills I had was on the big run up you see on the 34 chart. I missed the huge move, then got stopped as I finally got in, then caught a winner at the very top of the move.
Crazy trading.
34 Tick Range Bar Chart (click on charts to view)
13 Tick Range Bar Chart
13 Tick Range Bar Chart
I had 11 trades today and a couple of orders that didn't get filled, so it was a busy day. I don't want to (and you don't want me to) post 22 charts so I will post a winner, and a loser.
Again, I want to see the signal triggered on the 34 chart first then look to the 13 chart to find an entry point.
One of the no fills I had was on the big run up you see on the 34 chart. I missed the huge move, then got stopped as I finally got in, then caught a winner at the very top of the move.
Crazy trading.
34 Tick Range Bar Chart (click on charts to view)
13 Tick Range Bar Chart
13 Tick Range Bar Chart
6/10/2008
Wild Trading
The crude oil market was always considered to be volatile, so this market would have to be called something else.
Wild is one description. As I stated in an earlier post you either have to raise your stops or stop trading until this market cools down.
My measure of volatility is the daily 5 period average true range and it is currently running is dollars terms at $6,370.00. That is the largest range I have ever seen in crude oil.
Of course that ATR number has the Friday $10,000 plus range in it, but still this range / volatility is huge and should not be ignored by traders as it changes the whole market place you trade in.
If you did not know what product you were trading and had not been in the market for the past 2 weeks you would not believe that this was the same product you were trading 2 weeks ago. 14 days ago the 5 day CL ATR was $3,930.00.
So with that in mind if your trading is not working, it is not working for a reason.
The market has changed.
So what do you do?
One other method that can stand beside raising your stops is increasing the format in which you view the market. If you normally trade a 144 tick chart move up to a 233tick chart, if you trade a 3 minute chart move up to a 5 minute, etc.
At the very least keep your eye on a higher time frame market and wait for trend on it before you look at an entry on the shorter time frame chart.
If you don't want to risk dollars in a different time frame try simming it for a while and see how it works.
Remember you don't have to trade, and a day with no live trades is a break even day, which for some may be an improvement on past results.
Wild is one description. As I stated in an earlier post you either have to raise your stops or stop trading until this market cools down.
My measure of volatility is the daily 5 period average true range and it is currently running is dollars terms at $6,370.00. That is the largest range I have ever seen in crude oil.
Of course that ATR number has the Friday $10,000 plus range in it, but still this range / volatility is huge and should not be ignored by traders as it changes the whole market place you trade in.
If you did not know what product you were trading and had not been in the market for the past 2 weeks you would not believe that this was the same product you were trading 2 weeks ago. 14 days ago the 5 day CL ATR was $3,930.00.
So with that in mind if your trading is not working, it is not working for a reason.
The market has changed.
So what do you do?
One other method that can stand beside raising your stops is increasing the format in which you view the market. If you normally trade a 144 tick chart move up to a 233tick chart, if you trade a 3 minute chart move up to a 5 minute, etc.
At the very least keep your eye on a higher time frame market and wait for trend on it before you look at an entry on the shorter time frame chart.
If you don't want to risk dollars in a different time frame try simming it for a while and see how it works.
Remember you don't have to trade, and a day with no live trades is a break even day, which for some may be an improvement on past results.
6/07/2008
Oil Prices Take a Nerve-Rattling Jump Past $138
(Spencer Platt/Getty Images)Traders in the energy options pit of the New York Mercantile Exchange on Friday, where crude oil climbed to a record high.
"Friday’s jump capped a second day of strong gains on energy markets, and fed suspicions that commodities might be caught in an investment bubble." Jad Mouawad, NY Times.
Another clear and concise report from Jad Mouawad on the crude oil market. Click on the read more icon for the full NY Times article.
read more | digg story
6/06/2008
Crude Oil Explodes
Wow.
A confluence of events drove crude oil to new all times highs today.
The U.S. jobs report, a Morgan Stanley crude oil prediction, and Israel sabre ratting with Iran took the July NYMEX crude oil contract to an intra day high of $139.01.
Daily Crude Oil Chart (click on chart to view)
The trading today offered plenty of opportunities. You always look back on the day and think you should have carved more out. I stopped trading after the 5 minute trading halt happened as I was not sure if there would be another one instituted.
I, and I'm sure a few other traders, brushed up on the CL trading limits today.
Maximum Daily Price Fluctuation
"$10.00 per barrel ($10,000 per contract) for all months. If any contract is traded, bid, or offered at the limit for five minutes, trading is halted for five minutes. When trading resumes, the limit is expanded by $10.00 per barrel in either direction. If another halt were triggered, the market would continue to be expanded by $10.00 per barrel in either direction after each successive five-minute trading halt. There will be no maximum price fluctuation limits during any one trading session." Source: NYMEX Web Site
I caught 3 good moves, a few small stops, and a few no fills due to the speed of the market.
All in all a good day.
A confluence of events drove crude oil to new all times highs today.
The U.S. jobs report, a Morgan Stanley crude oil prediction, and Israel sabre ratting with Iran took the July NYMEX crude oil contract to an intra day high of $139.01.
Daily Crude Oil Chart (click on chart to view)
The trading today offered plenty of opportunities. You always look back on the day and think you should have carved more out. I stopped trading after the 5 minute trading halt happened as I was not sure if there would be another one instituted.
I, and I'm sure a few other traders, brushed up on the CL trading limits today.
Maximum Daily Price Fluctuation
"$10.00 per barrel ($10,000 per contract) for all months. If any contract is traded, bid, or offered at the limit for five minutes, trading is halted for five minutes. When trading resumes, the limit is expanded by $10.00 per barrel in either direction. If another halt were triggered, the market would continue to be expanded by $10.00 per barrel in either direction after each successive five-minute trading halt. There will be no maximum price fluctuation limits during any one trading session." Source: NYMEX Web Site
I caught 3 good moves, a few small stops, and a few no fills due to the speed of the market.
All in all a good day.
6/05/2008
Crude Oil Rises Again
The bull is back.
Crude oil was up over five dollars today with the NYMEX close around $128.00.
The momentum in the long trades was powerful in the afternoon session. This was in sharp contrast to the slow short side declines we have seen for the past week or so.
You'll notice my chart looks a little different today as I am trying to eliminate some redundant indicators to simplify the look and reaction time required in reading the chart.
Simple is always good.
13 Tick Range Bar Chart (click on chart to view)
The daily crude oil chart shows a nice bounce off the 34 EMA (white line) and back to the long bull trend.
Daily Chart
Crude oil was up over five dollars today with the NYMEX close around $128.00.
The momentum in the long trades was powerful in the afternoon session. This was in sharp contrast to the slow short side declines we have seen for the past week or so.
You'll notice my chart looks a little different today as I am trying to eliminate some redundant indicators to simplify the look and reaction time required in reading the chart.
Simple is always good.
13 Tick Range Bar Chart (click on chart to view)
The daily crude oil chart shows a nice bounce off the 34 EMA (white line) and back to the long bull trend.
Daily Chart
The Gas Prices We Deserve
"The Saudis aren't the only ones refusing to pump more oil."
Some interesting thoughts from Mr. George Will. Click the read more icon to get the whole story.
read more | digg story
Some interesting thoughts from Mr. George Will. Click the read more icon to get the whole story.
read more | digg story
6/04/2008
The Best Oil News Site on the Web
Looking for a one stop news site for crude oil? Click on the post title for the link.
Well here it is. They compile news stories from all over the world, hence the name World News Oil Network.
I think it is important with this commodity to gather information from around the world and not just from my large southern neighbor.
As far as the trading went today, well lets just say the risk management policy was in full force. :)
Well here it is. They compile news stories from all over the world, hence the name World News Oil Network.
I think it is important with this commodity to gather information from around the world and not just from my large southern neighbor.
As far as the trading went today, well lets just say the risk management policy was in full force. :)
6/03/2008
Trading Survival 101
Crude Oil Chart (click on chart to view)
Today was tough trading with a slow gradual decline in the market throughout the day. In hindsight the trade for today was get short at NYMEX open and flat at NYMEX close.
However that is easy to see now.
How does a trader survive periods like this, when the signals are getting stopped and the winners are not running?
Risk Management.
A sound risk management policy is required by all traders to preserve capital, as a trader without capital is a trader looking for a job. This is the most important policy in the start up phase of the trading business. Without sound risk management rules, and adherence to those rules the business will not survive.
Our thesis for the risk management policy is based on the principal that capital is scarce. If capital was not scarce it would have no value. We are willing to accept the trade off of lower overall returns by not trading all signals if we have hit our daily, weekly, or monthly stop in order to reduce our “risk of ruin”.
One of the key success factors of the successful trader is sufficient capital. The risk management policy is in place to ensure that capital remains sufficient.
We have seen large financial institutions fail (Barings Bank & Long Term Capital Management) or almost fail (Societe Generale) due to “rogue traders” or position sizing issues. These billion dollar institutions had large and robust risk management / compliance departments on hand and still failed to stop multi billion dollar trading losses.
The individual trader has no such department, if you choose to ignore your risk management rules no one will stop you. Thus the discipline to adhere to your rules will be the determining factor in your success or failure.
Our Risk Management Policy is as follows:
1) Trading capital on hand must equal to two times the minimum overnight margin required per contract traded.
2) The per trade stop loss percentage is set at maximum of 0.60% on each trade and is based on a percentage of the total trading capital
3) Weekly stop loss is set at a maximum 6.00% of total trading capital. If this threshold is hit in a Monday – Friday period trading for that week stops.
4) Monthly stop loss is set at a maximum of 10.00%. If this threshold is hit in a calendar month trading for that month stops.
5) If any of the trade plan’s rules are not adhered to, trading for that day stops.
6) Sim trading the plan can continue if a stop limit has been hit.
These are rules that we use, if you use similar rules your percentages could be quite different. The key is to have some idea of when to stop, before your broker stops you.
Today was tough trading with a slow gradual decline in the market throughout the day. In hindsight the trade for today was get short at NYMEX open and flat at NYMEX close.
However that is easy to see now.
How does a trader survive periods like this, when the signals are getting stopped and the winners are not running?
Risk Management.
A sound risk management policy is required by all traders to preserve capital, as a trader without capital is a trader looking for a job. This is the most important policy in the start up phase of the trading business. Without sound risk management rules, and adherence to those rules the business will not survive.
Our thesis for the risk management policy is based on the principal that capital is scarce. If capital was not scarce it would have no value. We are willing to accept the trade off of lower overall returns by not trading all signals if we have hit our daily, weekly, or monthly stop in order to reduce our “risk of ruin”.
One of the key success factors of the successful trader is sufficient capital. The risk management policy is in place to ensure that capital remains sufficient.
We have seen large financial institutions fail (Barings Bank & Long Term Capital Management) or almost fail (Societe Generale) due to “rogue traders” or position sizing issues. These billion dollar institutions had large and robust risk management / compliance departments on hand and still failed to stop multi billion dollar trading losses.
The individual trader has no such department, if you choose to ignore your risk management rules no one will stop you. Thus the discipline to adhere to your rules will be the determining factor in your success or failure.
Our Risk Management Policy is as follows:
1) Trading capital on hand must equal to two times the minimum overnight margin required per contract traded.
2) The per trade stop loss percentage is set at maximum of 0.60% on each trade and is based on a percentage of the total trading capital
3) Weekly stop loss is set at a maximum 6.00% of total trading capital. If this threshold is hit in a Monday – Friday period trading for that week stops.
4) Monthly stop loss is set at a maximum of 10.00%. If this threshold is hit in a calendar month trading for that month stops.
5) If any of the trade plan’s rules are not adhered to, trading for that day stops.
6) Sim trading the plan can continue if a stop limit has been hit.
These are rules that we use, if you use similar rules your percentages could be quite different. The key is to have some idea of when to stop, before your broker stops you.
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