“It’s not easy understanding how markets currently work.”
Things in markets are never what they appear to be on the surface; nowhere is
this more evident than the crude oil market, and the ways to trade this market.
The entire oil biz is priced on front month futures; ⅔ of the world uses Brent
[Europe, MENA, Asia], and the other ⅓ of the world [U.S., North America &
South] uses WTI; Brent futures are traded on ICE, and WTI on NYMEX, a
division of the CME.
The difference between the two is that WTI is a lighter blend, and has a lower
sulfur content, and is thus easier to “crack” for gasoline. Brent, on the other
hand, is a heavier blend with a higher sulfur content, and is more suitable to
“crack” for diesel fuel & heating oil. Brent is more affected by geopolitical
turmoil, and so problems in the middle east affect the price of Brent a lot more
than they affect the price of WTI.
Right now, both crude oil futures markets are in “backwardation”, meaning
farther futures deliveries are “lower” than the front month; WTI about -15
cents 3 months out, and Brent about -30 cents 3 months out to the front month.
Since there isn’t much difference between the two, many professional traders
love to trade the WTI/Brent spread, and currently it’s over an $11.00+ per
barrel premium Brent “over” WTI … and when you’re trading a 1 penny
spread market in both, it’s pretty easy to position the spread via futures.
Which brings me to current scumbag LP bank “scumbaggery” in the CFD’s
traded through offshore brokerage houses. Right now, being long Brent &
short WTI with a 1 lot for each, will cost you EVERY DAY via the rollover
“vig” charged by the bank, $1.78 for WTI short, and $1.03 for Brent long;
that = $2.81 per day, WITH TRIPLE VIG ON FRIDAY, so for the week it
would cost you $14.05 M-F & $8.43 for the weekend, so for the week you’d pay
$22.48 in “vig” … “wait … wut? … aren’t the back months in backwardation,
meaning they are actually cheaper than spot? … and so the damn bank can
actually get paid to hedge your position and then charge you $22.48 per week for
the position? … yes, scumbags top to bottom, and don’t forget the spread on each
pair, which will be another $80.00”!
So, what’s my point? … the point is simple: “you’re here to trade, not position
over days and weeks … the bank has no interest in your ideas concerning the
future, they’re only interested in “now” … and because of this, it becomes vitally
important you realize how important the spread is, cuz the bank is literally forcing
you to day trade or even shorter … because of the volatility in this market, 3 or 4
cents as a spread can be tolerated, and at the same time give the bank their “vig”
in making the market … 5+ cent spreads can’t be justified, and the damn bank
knows it, yet that doesn’t hold back their pure greed, as they often blow the spread
out for no reason … under those circumstances, you take a hike and tell them to
“F off”, and that’s exactly what I’ve been telling them [Turnkey & the LP’s], cuz
the only thing they understand is the loss of revenue; everything else is
meaningless to them”.
And they’ll look you in the face and give you their “tale of woe”, of how much
they got invested in computer networks, how fast markets move, how many
customers want to “pick them off”, and “blah blah, yada yada” until your eyes
roll into the back of your head … “stop, I’m getting tears in my eyes”. And I
would simply remind everybody, that approximately 11 years ago, a VP at Saxo
Bank told me, “yea, you’ll never see in your lifetime a spread lower than 6 ½
PIPS in GBPJPY … what we got here at Saxo can never be beat”! Checking the
latest spread here via Turnkey, I see a spread of 0.4 PIPS, and even with
“scumbaggery” that means a fill within 2 ½ - 3 PIPS. So, what happened? “It’s
called competition for business, something the idiot bankers don’t want to hear”!
Yes, it would be nice to position trade the Brent / WTI spread; it would be great
if the idiot bankers had CFD’s in gasoline & heating oil too, and it would be nice
to trade the “crack” … the first bank [s] that come along and price it right and
make it available will make a fortune with the trader community that has less
than $5K in their account … it’s probably as big as the futures market, but that
takes “vision”, and none of these assclowns even have enough good “vision” to
hit the toilet when they pee, let alone see potential in “bigly & yuge” markets.
So, we got the CFD’s right now … and in the works, I’m planning futures, and
with futures we also get “options” [puts & calls], which I’m thoroughly
proficient in and have used in my personal account for decades, and now at that
point I got MAX flexibility. [Note: Much more on this later, when it becomes
appropriate … right now, I’m focused on the oil CFD’s, following the algorithm,
and bringing profits back home to the PAMM. We’ll get to the futures when we
get to them.]
The nature of markets today has drastically changed from just a few years ago
… outside of actual, physical commodities that have worldwide appeal, the
scumbag banks control and really manipulate trading every single day
… except, they can’t control crude oil. That doesn’t mean there aren’t “stop
hunts” or gaps in price … hell yes they’re there, it simply means it isn’t coming
from a bank prop trading desk where they’re front running a corporate order
and bagging the trade for profit.
Turning to today’s crude oil markets … “hey, who’s up for some trading
volatility”? … haven’t seen anything remotely like this in the FX complex for
months on end, especially Cable … “just another day in crude oil … bon
Only one trade today … PAMM up half way to 0.1%.
Today was interesting to say the least … first on the agenda is the “trade war”
via China , Canada, Mexico, & the E.U., and the tariffs announced this
morning by Sec. Ross literally “spooked” WTI oil down the drain [Brent held,
thus blowing out the spread to above $11.00+] … that was followed by a rally,
where I got the first weak algorithm buy signal [there are 2 buy/sell signals in
crude oil; one “weak” for scalp, and the other “strong” for a longer hold period
if justified by market action, and thus “let the pony run” kind of trade … this
one was “weak”.] That was our one trade today.
That sent us into right before the 11 A.M. EST. EIA crude oil inventories report
for Cushing, OK. [the main hub for WTI oil deliveries], where instead of a
consensus forecast build of 0.92 million barrels, we got a drawdown of 3.62
million barrels … and price is up $0.40 - $0.50 in a second. A new high for the
day is set, and now comes the long liquidation, and I’m looking for a buy signal
… that buy signal never came, cuz literally in the next 20 minutes, price goes
down straight, and is now below the level before the report.
An hour later or so, I get a “strong” sell signal, but I don’t take it … why?
Well, Brent is hitting a new high for the day at the same time, and I’m
wondering what the hell is going on, cuz either Brent comes down, or WTI
explodes higher, and given the inventories report, I think the probability for
WTI higher is better than Brent lower … wrong … Brent gets “monkey
hammered” minutes later, and now WTI hits a new low for the day … “thank
you Mr. Market”! … since then it’s been a slow climb higher with no follow
through, the spreads have widened, natch, cuz the banks won’t let you stay in
without penalty ‘till the end of the day without putting a gun to your face and
holding you up for that little extra. All told, we had 3 trend changes today, and
they came fast and furious, while only 2 buy/sell signals … thing is, when this
market moves, it goes, and it can miss moves simply cuz the algorithm can’t
react that fast; if it did, there’d be way more “false positives” for loss, and
that’s not acceptable.
I said yesterday, that today I’d have some comments on a surprise market;
I’ve decided to hold off on that ‘till tomorrow, and thus make the comments
current for the entire weekend. All told with what transpired today in WTI oil,
with 3 very fast and vicious trend changes, I’m extremely pleased with the
algorithms performance … it avoided trouble, it gave me a decent scalp, and it
gave me a sell signal that worked beautifully if I had taken it … given that kind
of scenario again, I’m taking the signal … lesson learned. In the final analysis,
today’s action is nothing “special” … oil sees this kind of volatility all the time
… it’s why we’re here. So far, zero slippage on fills, and about 80% of the
trading day the spread is “acceptable” … not optimal, but I’m working on
them to make it better. This is a great market, and I’m kicking myself in the ass
for not being here sooner … I’m all about profits, and I don’t care if I’m
trading dirt futures … and boy, does the algorithm ever produce in this market
… Cousin It & CoS (Chief of Staff) Milton Waddums are “killing” the futures
in this stuff for their personal accounts … “they’re starting to make tons of
money and acting like real professional traders! … oh, the humanity”!
The future’s so bright, I need sunglasses … and with that, I’m outta here
… until tomorrow mi amigos … Onward & Upward!!
PAMM Spreadsheet directly below.
Have a great day everybody!
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