scalping brent

Discussion in 'Commodity Futures' started by Mr B, Jun 17, 2006.

  1. Mr B

    Mr B

    Hi, my boss has suggested that I try scalping the brent oil future on ICE, also the west texas on Nymex. I have previous experience in alg and general technical trading, fixed income and currencies. apparently there's great opportunity in the energy so I think I'll give it a go.

    does anybody out there daytrade oil? and if so what tips do you have?

    thanks in advance
  2. Please share with us your 'alg and general technical trading, fixed income and currencies' experience so we can judge whether it suits the brent, too... :p
  3. Mr B

    Mr B

    sure, it probably does. well the currency strategy anyways.

    for the fixed income 10 year and 30 year US and bund futures I enter on a 1 min stochastic, the parameters of which I program myself (needs to be different for varying instruments). 4 tick stop, 8 tick exit. I never ever trade against the trend. if 4 ticks onside I move the stop order to scratch.

    that's it.

    it works for me. I can normally take 100 ticks a month times contract size, slightly more in a trending month with good numbers.

    the currencies I look for consolidation patterns after a big move. for example triangles, pennants, short term correction trends. when they break the consolidation triangle/trend channel/range on increased volume I play the breakout. stop is at opposing limit of consolidation range, exit is when the volume dries up on the breakout and it grinds to a halt. I only play breakouts that go in the same direction as the previous breakout. in this case there is obviously no fixed stop or exit but winning trades can be up to a point and a half and losers normally less than 40 ticks. I have no fixed time frame for the currency setup.

    this also works for me. in practice it looks like an offspring of ACD method except I'm more about the volume than a strict 3 box breakout like Mark Fisher advocates. it is less consistent than the bonds work but you can pull 200 ticks in a good month.

    the currency one may well work for oil futures, as they move with similar ferocity and like to consolidate, but scalping trends, hmmmm I'd rather not rely on indicators. I regard them as lazy boy's tape reading and I don't think oil is smooth enough for systems based on period averages.

    what I'd really like to do is trade oil using market profile or point and figure. that's what the guys at our place do and in fairness their oil scalping makes more moolah (100 ticks plus in a day for some guys) than my fx and bonds work using less size and therefore doing less roundies. my styles of trading other instruments is also very tedious because I am so methodical.

    so what do you think?

    bear in mind that brent and WTI have nowhere near the liquidity of bond and even less than currency futures.