“Damn! ... you trade Brent crude oil to? ... what are the odds?”
Nothing is ever “safe” in crude oil, specifically Brent … especially in a quiet
market that appears to be drifting … somebody somewhere is always plotting
some shit, to take stops out via the high or low, like some war time raid on an
unsuspecting enemy. “This is the wrong place if your expecting the tiger to lay
down with the gazelle, and can’t we all just get along”.
The day starts out with a higher open in Asia, where after the opening minutes,
it’s pretty much straight down the entire night into my arrival around
4:30 A.M. EST … it’s Friday, with a G-7 meeting in Canada that’s got the
world’s attention, and there isn’t anything going on except the NASDAQ got
“monkey hammered” on some bad Apple news in Japan … outside of that, it’s
“dullsville”, with some minutes not even seeing but one or two bid price
changes it’s so slow … then, things start to pick up, but no real flow to things as
price is just chopping around.
Only one long trade today … PAMM up slightly on a “strong” algorithm buy
signal … when it won’t go and just sits, you got to pull the plug.
I get the price I want on the buy signal, but after I’m in, it takes over 10
minutes to get me out of the damn spread, which by the way today was a great
3 cents all day long … 1 penny up, 1 penny down, sit and do nothing for 20
seconds, rinse & repeat … enough of this, I just want to be out … I’ll come
back later when things pick up.
“Well, that escalated quickly to the downside, didn’t it”? … and then out of the
blue, right off a short term high, comes a 9 period M5 that goes down straight
approximately 85 cents per barrel … “it’s Thelma & Louise” and you’re in the
back seat … what a ride”. Of course, after it’s over, it’s straight up and then
sideways into the New York afternoon with a slight drift bias to the upside
… just enough to squeeze some shorts from the mini meltdown.
Not really much of a range for the European & U.S. trading sessions when you
take away the mini plunge from nowhere … by the time Europe opened and I
sat down to trade, Brent already had a 90 cent range … and now, having once
killed longs with the first mini meltdown, and then rallying all the way back up
about 75 cents off the low, here comes the second meltdown … this time in 4
minutes from the 70’s to the 20’s, “thanks and have a nice weekend” from
whoever that started the panic … like I said, “Turn your back on this stuff at
your peril, cuz there is no such thing as a safe trade”. All told on this insane
Friday, we’ve had 6 trend changes on the directional signal indicator, with
trade signals about half way up both up & down moves, which gives us very
little room to maneuver a position.
The one trade I made today, it looked for a second like I liquidated it too early,
but after going about 5 more points higher, it got mini “monkey hammered”
some minutes later, and it appeared to me “chop” was going to be the flavor
du jour for today’s trading, and who wants that?
As with every single version of every algorithm I’ve ever developed, not getting
seriously “whacked” is the first priority of trading … today’s “chop” action,
after our first trade, saw Brent price & algorithm signals at “loggerheads” over
direction … meaning, algorithm says “get long now”, but price has already
rallied, or algorithm says “sell right now” but price has already collapsed
… “you gonna really buy or sell in the hole when trading Brent, to the tune of
greater than 20 - 30+ cents? … are you nuts”? So, in that regard, the algo kept
me from making bad decisions; decisions in a “chopfest” you don’t want to be
making … when your smack dab in the middle of a choppy market, it isn’t the
time to be asking for directions!
Of course, over long periods of time everything has to be seen in the
marketplace, but nobody sends us an email telling us the day will be “officially”
a bag of warm bat guano before it takes place, and that today is gonna be that
day … here at 3 P.M. in New York, after almost 11 hours of trading, all we got is
an 85 cent range, tip to tip, with the market sitting in the low 30’s … “yup, that’s
a doji in a smallish range (smallish for crude), and that’s gonna be trouble, cuz if
you start getting multiple signals quickly, that’s your first warning flag up the
flagpole that something is amiss” … and boy, has today been one of those
And so, you always have to be aware of these kinds of days, and then back the
hell away before any damage is done, cuz in Brent, it will be fast and it will be
vicious with very few if any accounts not totally unhappy … we were there
today when it counted, but the market had other ideas … tomorrow’s another
All told, I played the only decent buy signal the way I should have … get in, give
it some room, but when it fails to go higher on multiple attempts and then gets
taken down quickly in price from a small move up, it’s time to liquidate and
then look for the next signal if and when it comes. In the final analysis, not
disappointed in today’s trading … it’s a useless, worthless day … I’m outta here
for a cold one, maybe two …. This weekend I’m working on the Brent trading
manual … until Monday mi amigos … Onward & Upward!!
PAMM Spreadsheet directly below.
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