Well, I don't you use tight stops it all depends how it behave, but right now like you said, I am demoralized, I need now to the shake up, and forget it about and tomorrow will be a new day.
I've been looking for a 70-tick trade in CL for a week now. I've worked so hard practicing letting winners run, scratching profitable trades, then I get a runner and by then damn action has CONDITIONED me to take my $200-$300 profit and run. So today early on, I scratch three trades, happy with my management there. Then I take a 17-tick loss, still happy with my trading, just getting myself positioned for what I know will be my 70-tick runner. Then I catch a 20-tick winner, pleased with my management of that one, as it just missed my target by a wee bit and I took what I could. Positioned myself short again and took 16 ticks as price continued to work the range. I then miss the range breakout, but on the extremely shallow pullback failure, I jump in short @ 75.12 like a machine, not a single thought and it's immediately profitable and I trail my stop too quickly, stopped out for 13 ticks profit in 20 seconds and then it wiggles for a few seconds and breaks down 70 ticks from my EXIT. I'm not chasing it further because the whole time it's falling I'm thinking it's too low, it's gonna bounce any minute. In the words of Lewis Black: "Unbef*ckinglievable!" I did play one more break to the short side for 28 ticks, well-managed considering how sold off it already was, but I'm so frustrated that my 70-tick runner has been eluding me for days. :eek:
Sounds like im being a dick but there is very little fundemental relation in energy markets. Think back to all the times that you have seen good news come out and then the market tanks. The way most markets work now is position for the news then sell or cover when it comes out. Look at what oil did when the announced the moratorium on offshore drilling.
Hi Delta, welcome to the world of trading oil Just a thought: if you check how much CL can move over a weekend, you'll see that it can move over 10 full points in a gap - don't take my word for it, see it for yourself. Also, normally gap risk in energy is to the upside due to geo-political events. If you add to that the fact that IMHO you're severely undercapitalized, you may want to stick to intraday trades and never leave positions open overnight (risky) or for the weekend (in my view, insane). Also, you later write that you feel like a fool for having covered at 75.60 when it later dropped, but that drop had nothing to do with oil per se, it was a reaction to the "news" of the latest downgrade of Greece - were it not for that random piece of news, oil could have broken 76 and skyrocketed another full point, so... cut your losses while you can. Good luck and best trading, Jorge
Hey Jorge, Thanks for the advice regarding futures position management. If you believe I am severely undercapitalized (which probably is a correct assertion) what do you suggest is a comfortable level of capital to possess in futures trading such that I'm not taking on massive amounts of risk. As you can tell from my username, I'm more of an options trader than anything. Primarily I focus on doing income trades (i.e. condors, butterflies, calendars, double diagonals, etc.) but wanted some "day trading action" to add to my portfolio returns especially when the market has a great deal of momentum. In hindsight trading crude, unless I REALLY am committed to it and enjoy that level of price action, it's possible that I'm much better served by trading index futures (i.e. ES YM and RUT). Regardless, I do believe trading CL does offer some lucrative opportunities and am always seeking new profitable ventures. Any thoughts/advice/commentary you wish to share would be greatly appreciated.
No doubt I agree that markets right now are extremely volatile with some odd tendencies in reaction to the news. However, if you take a look at what others are saying in the energy futures forum on elitetrader when discussing CL calendar spread trading (i.e. Sell July/Buy August) they almost solely rely on fundamental dynamics within the energy market (e.g. examining inventories, keeping in mind concepts of backwardation and contango, etc.). Granted you would argue "I don't give two shits about that since I'm DAY TRADING the front month" and your point would be well taken. However, I do believe the fundamentals cannot be disregarded and ultimately trumps the technicals. At this juncture you could certainly argue I'm probably more wired as an investor (even if it's for the REALLY short term i.e. 1-3 weeks) than a day trader who gets in and out of positions frequently, which I is most likely true.
I did not pay much attention to crude and trade it today, happy with NG trading, NG is in the run, I like to trade in the major direction. easy, and relaxed. crude is way up then way down, hard to do that. since when it hits low, I will naturally think about "short it", but no, it comes back, when it goes up and hits new high, I may feel it is strong and buy, just when I buy it, it falls! when I try my cross indicator, when I enter a position when my cross indicator flashes, it immediately goes against me, when I do not enter a position and my cross indicator flashes, the market goes with my indicator, kind of very odd. fading is pretty effective in this kind of market, but I get used to my trading hunch, hard to change. NG is just traded as I imagined, hit support and bounce, then leap higher, a typical up trend, very easy to deal with it
Delta, I cannot define your comfort level with volatility and capital, but if you're going to be trading oil with a small (futures) account and particularly if you want to hold for longer periods you'll probably want to either add funds to that account or trade the QM as some other people in this thread (same as CL but half the size - less liquidity and a bit wider spread and slippage, though, but for swing positions this should not make that much of a difference as in scalping, say 20 ticks). As a reference (neither good nor bad, but to give you an idea), I initiate my positions with about 1 contract per 10,000 USD (which I consider aggressive) and use on average a 20 ticks stop; then add twice to the position as it moves in my favor and keep moving the stop to breakeven till I have a position of about 3 contracts per 10,000 USD and target a 0.8-1.2 swing move lasting 1-3 hours. Other people in this thread probably trade more leveraged, but use smaller stops and targets. Also, of course, if you haven't traded oil futures before, I would trade in demo for a while as some people have suggested.
Sarvise, I would love to see a chart or trading blotter of one or two of your trades like this. I still feel pretty much like a scalper, when in fact I often feel I should be adding to my winners, rather than jumping in and out of trades, trying to time each leg in a trend. I sim traded CL for MONTHS before going live. I tested many strategies until I became one with the price action surrounding a variety of my favorite setups. As a result, I'm pretty good at choosing entry points that place trades immediately in my favor and rarely place a stop greater than 25 ticks.