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1% per day in Crude Oil

  • #81
  • Edited 8:49am Jan 28, 2017 8:39am | Edited 8:49am
You might wonder that I'm trading minimum of 15 lots with high risk. Thats not true. Specifications vary from broker to broker.

The broker I'm trading is offering crudemini only.
So the margin required to open 15 lots is around $2500 only (5% margin on the capital of $50000).
So don't get confused with 15 lots.I'm using only 5% margin of my capital.
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- Jack of all trades, Master of none -
  • #82
  • Jan 28, 2017 9:12am Jan 28, 2017 9:12am
Two important things to know when trading oil. The open range Breakout and Energy times.
ORB is filling the gap at the open or trading in the direction of the trend after the 1st series of candles. Many traders just trade the opening hour and get rich.

9am, 10:30am, 11:30am, 1:30pm, 2:30pm are called energy times because at such times the crude market suddenly jumps and runs and runs.
Then it stops, it ranges, it pauses and suddenly starts running again at a specified energy time.

You will be able to trade the crude oil market effectively if you spend a month observing the charts like another member suggested.
  • #83
  • Jan 28, 2017 11:17am Jan 28, 2017 11:17am
Quoting nivashkumar
You might wonder that I'm trading minimum of 15 lots with high risk. Thats not true. Specifications vary from broker to broker. The broker I'm trading is offering crudemini only. So the margin required to open 15 lots is around $2500 only (5% margin on the capital of $50000). So don't get confused with 15 lots.I'm using only 5% margin of my capital. {image}
Hello,
Many years ago I attended a seminar by Larry Gaines, a renowned oil trader. What I learned was overwhelming and way over my intelligence level. Reading the notes that I have taken, he taught in detail several things that an oil trader needed to pay attention to:
1. Crack Spread
2. Seasonality (summer vs winter)
3. Choke points around the world
4. Weather (hurricanes) in Cushing, OK
5. Hedging via calendar spreads
6. Baker Hughes rig count report and the weekly (Wed 1030am) oil inventory report

1. There are 2 crack spreads, the more complex 3:2:1 ratio involves heating oil and gasoline (RBOB), and the simpler one involves RBOB only. RBOB (petro, or gasoline) is measured in gallons, and there are 42 gallons in each barrel. Therefore Larry said to pay daily attention to the difference between (42*RBOB - 1*CL). Larry spent a lot of time in that seminar teaching how to trade the simple crack spread.
2. I didn't catch the gist of the summer vs winter trading patterns, so my notes were blank in that topic
3. There are (I think) 7 or 8 choke points in the world, any political turmoil in those places will drive oil prices up drastically. He said he had news feed to monitor any major news from all choke points around the world
4. I think only in the summer do we need to worry about the weather in Cushing, OK
5. When Larry is short oil (near month), he often will go long the far month to take advantage of contango and to hedge his risk

Coming back to #1: I just checked and realized that the crack spread right now is rather low: at around 11. That means that, for each contract of 1000 gallons of crack spread (42000 gallons - 1000 barrels), you pay $11 to go long and every $1 move is worth $1000. And if one does it in a CFD account, one can play for much less volume (say, 10 spread instead of 1000). Might be an idea to cogitate. Your thoughts, sir? (see chart below)

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I have no experience in the energy markets but I am very eager to learn. I am hoping to learn a few things from your posts.
  • #84
  • Jan 28, 2017 12:07pm Jan 28, 2017 12:07pm
Quoting alucko33
Two important things to know when trading oil. The open range Breakout and Energy times. ORB is filling the gap at the open or trading in the direction of the trend after the 1st series of candles. Many traders just trade the opening hour and get rich. 9am, 10:30am, 11:30am, 1:30pm, 2:30pm are called energy times because at such times the crude market suddenly jumps and runs and runs. Then it stops, it ranges, it pauses and suddenly starts running again at a specified energy time. You will be able to trade the crude oil market effectively if you...
hi
these energy times are in est or gmt
  • #85
  • Jan 29, 2017 1:50am Jan 29, 2017 1:50am
Quoting SnoopyAKQJT
{quote} Hello, Many years ago I attended a seminar by Larry Gaines, a renowned oil trader. What I learned was overwhelming and way over my intelligence level. Reading the notes that I have taken, he taught in detail several things that an oil trader needed to pay attention to: 1. Crack Spread 2. Seasonality (summer vs winter) 3. Choke points around the world 4. Weather (hurricanes) in Cushing, OK 5. Hedging via calendar spreads 6. Baker Hughes rig count report and the weekly (Wed 1030am) oil inventory report 1. There are 2 crack spreads, the more...

I don't know about crack spread. Can you elaborate it and explain how can you use this data to trade crude.
- Jack of all trades, Master of none -
  • #86
  • Edited Jan 30, 2017 5:38am Jan 29, 2017 6:46am | Edited Jan 30, 2017 5:38am
Quoting nivashkumar
{quote} I don't know about crack spread. Can you elaborate it and explain how can you use this data to trade crude.
I don't want to pretend that I know crack spreads trading, but this is ALL that I can tell:
1. It is the profit margin for oil refineries. Therefore, it can never go to zero. If it gets too low, they will raise gas/petrol prices. When it gets too high, there will be protests on the street. Larry Gaines said (if memory serves) that it should be between 10 and 50
2. Larry also said to ignore the 3:2:1 ratio for trading purposes, and focus on the 1:1 ratio. That means we evaluate this formula: (42*RB0B - 1*CL)=crackspread every day, and when it gets too low, we do the following: Buy 42 gallons of RBOB, and sell 1 barrel of oil.
3. As of right now, the crack spread evaluates to about $11. So on Monday if we buy 1 crackspread, and wait for it to move to $12, we will gain $1, ie 10% move. For oil to move 10%, it needs to move $5. Hence one can see the leverage.
4. When I attended the Larry Gaines seminar, oil was trading for $100, so a 10% in oil was very unusual, but a $1 move in crack spread was not that atypical. Hence he advised his students to pay attention to this product.
5. The CME web site has all the crack spread quotes: http://www.cmegroup.com/trading/ener...p-futures.html


Example: (I find this trade tempting)
For March crack spread trade (assuming long):
Long: 42 gallons of RBOB (gasoline)
Short: 1 barrel of WTI crude
Cost: $12 per CFD
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  • #87
  • Jan 29, 2017 7:29pm Jan 29, 2017 7:29pm
Energy times are in EST.
I heard about those B. Hughes rig count reports as being important. I also heard about those 7 choke points around the world too. When they are in ebullition the price of oil violates monthly support or resistance with huge candles.
I use an order flow software with market profile in order to track where the institutions are transacting on one chart. Then, I follow the price action over different other time frames. A crazy trader who had followed crude oil for 6 hrs/day for 6 months came up with 6 ways of trading it successfully just using the vWAP.
Being aware of the fundamentals and of the correlations is crucial in trading crude oil like Snoop seemed to point out.
  • #88
  • Jan 30, 2017 5:16am Jan 30, 2017 5:16am
Looks like CL is having a bullish day this morning:
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Left chart shows it is way above VWAP.
Right chart shows a bullish tick chart (133 ticks). I am probably late to the party and slow on the draw.
  • #89
  • Jan 31, 2017 7:03am Jan 31, 2017 7:03am
I'm bearish on crude oil.... I might be wrong... Let us see....
- Jack of all trades, Master of none -
  • #90
  • Jan 31, 2017 9:12pm Jan 31, 2017 9:12pm
Quoting nivashkumar
Hi everyone , I'm Nivashkumar. I trade only crude oil. I went through lot of threads in FF but there are few threads for crude oil. The purpose of this thread is to discuss the ways to earn 1% per day on the investment by trading crude. All suggestions , discussions are welcomed.
1% per day..So how many % you can get one month?
 
  • #91
  • Feb 1, 2017 1:42am Feb 1, 2017 1:42am
Quoting chaaiying
{quote} 1% per day..So how many % you can get one month? Â
I'm expecting a return of 20 % per month.
- Jack of all trades, Master of none -
  • #92
  • Feb 1, 2017 5:12am Feb 1, 2017 5:12am
Quoting nivashkumar
{quote} I'm expecting a return of 20 % per month.
Would you care to share your trading methodology? I am all ears.
  • #93
  • Feb 1, 2017 5:02pm Feb 1, 2017 5:02pm
Quoting SnoopyAKQJT
{quote} Would you care to share your trading methodology? I am all ears.
Dear friend,

Any strategy is useless unless it is profitable. I'll share it with all of you if it is profitable . Kindly give me some time to workout. All the suggestions and tips will be helpful and are welcomed.
- Jack of all trades, Master of none -
  • #94
  • Feb 1, 2017 5:56pm Feb 1, 2017 5:56pm
Yeah.
One candle that lights up another one will always shine no matter what.
  • #95
  • Edited 6:26am Feb 2, 2017 6:03am | Edited 6:26am
Quoting alucko33
Yeah. One candle that lights up another one will always shine no matter what.
Someone (can't remember who) once said: Curse not the darkness, light up a candle.

As i type, looks like crude oil is very bullish this am:
M5 chart on the left, 10-tick (ie $0.10) range chart on the right:
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SL would be about $0.15 - just an idea.

EDIT:
SL got hit after 20 mins.
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  • #96
  • Feb 2, 2017 6:34am Feb 2, 2017 6:34am
Quoting nivashkumar
Trading crude is different from stocks and currencies, as stocks are related to specific countries while currencies are related to set of countries. Crude is a universal product which is used and traded all over the world by government institutions, as they spend/rely most of their foreign exchange on importing/exporting crude. So indicators which are working for stocks or currencies won't work for crude. That's why I said not to use indicators , as they might not work with crude. In my view reading the price activities on every single point is...
IMHO, oil has no differnce with currencires, futures, commodities, indexes or whatever. If you trade without indicators, you can do the same with other items. Oil is also corelated with usdx and moves reflecting this. Unless you have edge specifically on oil such as insider tips or something, it's no difference.
Simplicity is the ultimate sophistication - Leonardo da Vinci
  • #97
  • Feb 3, 2017 12:58am Feb 3, 2017 12:58am
Quoting heispark
{quote} IMHO, oil has no differnce with currencires, futures, commodities, indexes or whatever. If you trade without indicators, you can do the same with other items. Oil is also corelated with usdx and moves reflecting this. Unless you have edge specifically on oil such as insider tips or something, it's no difference.
Heispark, on this point, I agree with Nivashkumar. A lot of traders may say "a chart is a chart is a chart, and you can read all market charts the same way ..." It's true that a lot of technical analysis may apply to charts from many markets the same way (like S+R lines, round numbers, large range bars, NR7, etc). But there are so many subtleties that are different for different markets. For example, I would not trade the ES the same way as CL, or the bonds, or the VIX. There are so many forces behind price movement in the different markets that a good trader should take into consideration, that are not obvious in charts (until it is late). To name a few: Time of day, Oil inventory reports, FOMC, Crop reports, Weather reports for OJ/Coffee, Intermarket relations, contango, seasonality, etc. It's good to concentrate and specialize to only a few markets if trading futures. Just IMHO.
Bill
  • #98
  • Feb 3, 2017 1:44am Feb 3, 2017 1:44am
1% as your ROI? or 1% of CL price.

If you are looking for 1% as your ROI each and every day, over the course of a trading year (252 days), you will end up with an account of 12X greater than your starting point.

If you are looking for 1% of CL price, let's say it stays in the neighbourhood of $60, so 1% is $0.6 or $600/contract. I don't know how much you are starting with but if you make $600 per day with 252 days, you will be making $151K per year.

Anyway, I don't think you can make 1% in any shape or form "EVERYDAY" because there isn't a perfect strategy that fits all market conditions.

Good luck,
  • #99
  • Feb 9, 2017 4:31pm Feb 9, 2017 4:31pm
Quoting SnoopyAKQJT
{quote} Hello, Many years ago I attended a seminar by Larry Gaines, a renowned oil trader. What I learned was overwhelming and way over my intelligence level. Reading the notes that I have taken, he taught in detail several things that an oil trader needed to pay attention to: 1. Crack Spread 2. Seasonality (summer vs winter) 3. Choke points around the world 4. Weather (hurricanes) in Cushing, OK 5. Hedging via calendar spreads 6. Baker Hughes rig count report and the weekly (Wed 1030am) oil inventory report 1. There are 2 crack spreads, the more...

This was very helpful reading. I came to love forexfactory for the calendar and I am digging in deeper to see what all is here. What I find most interesting about the weekly inventory report for CL is that RBOB will effect the price movement more dramatically that crude inventory. Can anyone tell me where you can find the RBOB inventory report that would include projected versus actual, like you see for many things on the calendar here? It would be really nice if forexfactory would include that in their calendar as well as CL inventory on Wednesdays.

Thanks for any input.

Best regards,

DolfanDave
  • #100
  • Feb 10, 2017 4:16am Feb 10, 2017 4:16am
Quoting Dolfan
{quote} This was very helpful reading. I came to love forexfactory for the calendar and I am digging in deeper to see what all is here. What I find most interesting about the weekly inventory report for CL is that RBOB will effect the price movement more dramatically that crude inventory. Can anyone tell me where you can find the RBOB inventory report that would include projected versus actual, like you see for many things on the calendar here? It would be really nice if forexfactory would include that in their calendar as well as CL inventory on...
Don't know if this is what you are looking for? https://www.eia.gov/dnav/pet/pet_sum...dcus_nus_w.htm
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