Question for long time CL traders: When does volume typically drop off during the year end holidays? The week of Christmas and New Year's? Or does CL tend to provide enough intraday action to make trading it worthwhile during this time of year?
Not such a long time CL trader (2007-2008), but being such a smart aleck, I cannot help but to answer all the same It depends a bit on how Xtmas and New Year's fall on the week, but volume tends to diminish just a bit right before Xtmas, stays at about 1/3 - 1/4 of normal in between (big funds on vacation, save for a few guys on guard duty) and then picks up back to normal quite abruptly after New Year's. Still, there's usually enough volume to trade (particularly small size), although you will tend to get a bit wider spreads. For the most part it feels like trading overnight. As for volatility... well... here it gets trickier. It <i>tends</i> to drop in a similar proportion to volume (probably volume drops a bit more than volatility), but... OK, you know you want it, so here's some trader's porn for you: 31st of December 2008... oil is trading in the low 40's after nosediving over a hundred bucks from a yearly high of 147 in July - two days after I decided that to keep on shorting was suicidal, indeed. Every time it seemed it had bottomed it fell some more, but finally volume was dropping, interest was declining and it all seemed to indicate that the holiday season would be holiday-ish... and then... Chan-chan! On Xtmas Eve, after opening at 39.15 and making a timid attempt at 40, falling short at 39.69 it went down 4.5 full points bouncing a bit at the 35.35 close. Keep in mind that at those levels, that's an over 10% move in one single session (actually half a session). The next few days saw some action too with moves averaging 3 dollars. Volume was slightly higher than the usual during the holidays, but still about a third of previous daily volume. When it seemed things were getting back to normal and that oil was finally consolidating withing a range after finding its bottom, then... the collapse, right? On New Year's Eve oil opened at 39.17, almost to the tick to where it had opened on Xtmas Eve and started falling... 38, 37... would oil still break the multi-year low it had established a few days before? Then after breaching 37 flat by a few ticks, it started to bounce, then bounce some more, then it got into the green, popped some stops at the previous day HOD, kept going... 40... 41... broke the downward channel, broke the weekly high... 42... 43... kept popping stops... this was overdone... more shorts came in... this was due some serious correction... big swingers kept averaging down... 44... at 45 the last shorts gave up... 45 and a half... then almost a full dollar of profit taking to close at 44.6, up 14% <i>for the day</i>... One of the normally silliest days of the year, with oil at record lows, turned into a monster 8.5 dollar day (about 20% of nominal contract value), with three major swings totaling over 11 dollars... Tell your husband he's very welcome :eek: http://money.cnn.com/2008/12/31/markets/oil/index.htm PS: If this doesn't convince average-down-ers to have a backup plan, I don't know what will ("Yeah, but it's different now, besides I only trade long/the ES/small size, blah, blah, blah") PS2: The rule of thumb is this: if you stay glued to the screen it will be dead in the water; if you decide to take the day off, you will come back to see THE move that would have bought you that Ferrari you don't really care for but that would be cool to rub in the face of you-know-who. ...
The look of the daily chart is extremely bullish to me, but I'm working really hard not to form opinions, because when I form an opinion I will watch a massive move run without me while wait all-too-patiently for a signal in my opinion's direction. Which, although far better than averaging down based on an opinion, still leaves me pissed that I wasn't making money when the market was pretty much throwing money around... A downside move through 86.00 takes us back to 83.00, but an upside move through 89.50 and the counter-trend shorts will be wiped out IMHO. That "O" stands for "opinion" BTW Picaso, thank you for the reply and especially that trader porn. Good timing on a Sunday night when my husband's away for a few hours
Re: Christmas holiday order flow: Most traders I know take the last three weeks of December off. The bank desks and funds are not in the market, and won't be until the first or second week in January. The order flows can get very wacky. FWIW during the other eleven months in the year I won't trade crude in the afternoons after the NY close, and I won't trade crude after about noon on a Friday. Personally (and your results will probably differ), I want to take signals that I think have some institutional order flow behind them - I want there to be some follow-through. Most everybody has a different holding period and time horizon in the market, so this is just my approach to CL. The other piece is that I do take off-hours CL trades as part of a synthetic spread position with other markets - metals, currencies, and equity indices. Just me, maybe a bit of color.
-.23 argh! stopped out at .24 (-1 tick) damn! jumpy, bidding/offering a tad late in several trades already, but reading ok so far