That is an interesting way of approaching trading: Its like always playing AK the same way in poker, instead of playing it different ways depending upon your analysis of this given situation.
Traders are naturally an intelligent, intellectual group of people. They got where they are today in part or whole by processing information. Logic & reason. If you are stumped by a puzzle or task, just gather more information and sift out the facts. So they approach trading the same way. Research, research, research must be the key. Figure out supply/demand and you win. Let's save ourselves a few thousand words on explaining why that is and summarize like this: everyone who ever tried trading has at one point if not the entire time tried to use logic, reason and research as a profitable edge. That said, why then did they all (with no exceptions) fail? Because the puzzle has too many odd-shaped pieces to be solved by any man. The only traders who succeed long-term are those that approach the markets in systematic fashion. Any broker will tell us that when asked. Methodical decision process, over and over again. Think blackjack playing and you are 100% on track. fwiw I have never in my life watched results of an oil inventory report. I don't even have a television anywhere near my office. It's just watching the charts, making the reads and taking action in methodical fashion. Over a large sample size of similar trades, an edge plays out in statistical fashion. Logic & reason are a siren song to traders... leading them into deep waters with swift currents.
I really admire you guys who can swing trade this thing. I need to generate daily predictable profits and I picked a time frame and method that works for me. I gauge the momentum surrounding each trade and choose targets. Sometimes they're fantastic (pure counter-trend long later today CLZ0 @ 80.66, target pullback to 20 EMA @ 80.91, .04 from the pivot high), sometimes they're awful (confirmed counter-trend short after the inventories @ 82.16, target 20 EMA if price pivots there, out there for 20 ticks, it ran another 50+ and I didn't re-enter short until the next pullback). Swing trading definitely requires wide stops (1.00 minimum, 2.00's often better), but also you should have wider targets of 3.00 or more IMHO.
I'm w/ Austin on this - when I'm trading it's my charts and music on in the background. Watching the talking heads or reading more and more fundamental data causes paralysis by analysis. One thing that I have read on these boards by guys/gals that at least talk the talk is that whatever information you want is on the chart. Any news is already reflected on what is directly in front of you. BS, good luck in your journey whether that be the CL or not. I will say this - all markets have their own idiosyncrasies and nuisances. Personally, the ES drives me nuts w/ the constant need to break levels just to grab a few stops, bring along some breakout traders and then go the exact way you expected. Every market has it's own mannerisms.
Nod, if I may ask you a question: you have many times mentioned that your minimum profit target is 20 ticks, but what is your average profit per trade <i>in your winners</i>, i.e. not your trade expectancy, but within the universe of your winners, what's your average/typical winner in ticks. Thanks as always for your insights. [Thinking hard about what Austin explained: I think that's the piece that was missing in my puzzle ]
Traders are naturally an intelligent, intellectual group of people. They got where they are today in part or whole by processing information. Logic & reason. If you are stumped by a puzzle or task, just gather more information and sift out the facts. So they approach trading the same way. Research, research, research must be the key. Figure out supply/demand and you win. Let's save ourselves a few thousand words on explaining why that is and summarize like this: everyone who ever tried trading has at one point if not the entire time tried to use logic, reason and research as a profitable edge. That said, why then did they all (with no exceptions) fail? Because the puzzle has too many odd-shaped pieces to be solved by any man. The only traders who succeed long-term are those that approach the markets in systematic fashion. Any broker will tell us that when asked. Methodical decision process, over and over again. Think blackjack playing and you are 100% on track. fwiw I have never in my life watched results of an oil inventory report. I don't even have a television anywhere near my office. It's just watching the charts, making the reads and taking action in methodical fashion. Over a large sample size of similar trades, an edge plays out in statistical fashion. Logic & reason are a siren song to traders... leading them into deep waters with swift currents. I have always thought to combine both fundamental and technical, so I watch the charts, read price action, but then I want to go over the report, just like many of the I-Banks....I get some of their research reports from a friend, and they are quite extensive, so they care about the fundamentals, and factor them into their overall trading strategy, so if I am long, and I am looking for a clue as to how potentially strong this move could be, if I can glean some insight from the report, that says....wow distillate demand really picked up, the products could really drive this trade, stay in it longer.-I have always thought that was beneficial. But maybe they have longer term strategy & capital horizons than an independent day trader. It is an interesting hypothesis that any outside info other than just price action of the instrument on the chart could potentially harm one`s interpretation of the data, that a trader could form conscious or unconscious biases that get in the way of properlying identifying what is actually going on in the instrument, and taking the proper actions, i.e., some form of projecting onto neutral data points potential future moves that are inconsistent with the actual price action. I sure would feel naked if the market really tanked, I would turn on the news, and see what caused it, and use my Logic and reasoning, to determine if this is an over-reaction, and I should buy the large drop or stay away, or short.....i.e., a terrorist event------use my analysis to decide if this has long-term implications. Maybe its just the state of mind benefit, that by having this starting point for a trading philosophy, this approach actually enables you to read price action better, or more open to what the action is telling you regarding future direction. I guess some time I think Pure Price Action Trading is sort of like another cult....which becmes delusional and self-fulfilling in nature, replete with its share of group think, and oversimplification.
What makes price action trading so effective is that it is self-fulfilling in nature. Buying attracts more buyers, selling attracts more sellers. Strong moves eventually exhaust themselves and bargain hunters jump in, creating trend reversals. The other great thing about price action trading is you can comfortably go long when the news is bearish and easily sell short when the news is bullish if price is telling you to do so. How many CL traders today had difficulty shorting all day (or tried to find long entries) because the inventory news was bullish and the initial reaction to the news was bullish or because price had fallen so far so fast off the recent highs? Not long ago I would've missed the best the market had to offer today because I would've believed that the bullish news and initial reaction meant price had to start rallying at some point. I finally decided price had dropped too low to short late today and I missed a 60-tick move. Price action itself told me that yet another short was setting up and price then fell to all new lows on the day, but my opinion kicked in by that point, my logic and reason that said "Price has fallen too far now and the risk:reward ratio is no longer good enough to take this valid short trade setup." The way I know how the "big money" is interpreting the news is by what the price is doing. I want to do what the big money is doing because they move the markets. 25 ticks on a counter-trend pullback that takes almost half an hour is nice, but 40 ticks in less than 10 minutes by riding along with the market movers is way more gratifying. I lost tens of thousands of dollars fighting irrationality with my reason and logic. My friend and I frequently remind each other to be dumb traders and make money, instead of over thinking and missing the boat.