CL price action Life cycle:
Brake out: happend on 9/29 after EIA , CL is in range bound 74-76 for 10 days while ES/EURO is climibing. after good EIA is pulled down ( MMs accumulating ) then after 1 hour broke out started and broke the 77 range by eod
Hihger highs: posted HH every day , higher high on consecutive days
( intraday high: buy $1.5 below puts, and SHOT very highs
intraday low: buy $1.5 above calls, go LONG ( with previously bought puts as insurance )
Top 1: topped around 84.40 ( buy $2 below puts )
Consolidate 1: then 2 days of consoildate 84.40 to 82. 40 ( wiat only go LONG/Short with previously bought puts/calls as insurance )
Shake Up 1: shake up day morning topped at 84.40 then shake up started . For shake up you need an event. This time the event is 10/8 job report . so a day before 10/7 morning shake up started with an excuse of EURO dropping. after morning high of 84.40 with EURO excudse CL dropped ( shaked ) to 82.30 , while EURO dropped only 1% form 1.40 to 1.36 , CL dropped 84.40 tp 82.40 ( close to 2.5 % ) .
- this shake up is predictable. next day 10/8 Job report ( employment numbers) is coming , so CL is very sensitive to it. and CL MMs want to shake it and they got a reason tommorrow JOB report and got excuse EURO dropping , so there goes Shakeup 1
( wiat only go LONG/Short with previously bought puts/calls as insurance )
then you may have Top 1.2: Consolidate 1.2: and Shake up 1.2
Consolidate 2:
Shapke up2:
Break down:
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todo:
- use freemind mind map http://freemind.sourceforge.net/wiki/index.php/Main_Page#Features
use this for CL short and medium term factor focusing .. like supply disruptions ( oil enbridge leak )
- based on this develop a expert system in PHP ( as a web page ) , it takes input a) what happened today like Enbridge disruptions b) how long it takes to situation to comeback to normal c) then based this input give TRADE ideas like LONG front/back contract spread
- and also see in the past how this pattern worked ( profit/loss , days etc.. ) so for this we need to give input of past events ( take goolge archieve with bloomberg news for last 10 years )
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Here are some identified CL price patterns ( market makers patterns on small guys )1. Range break out: ( this happened on after EIA day , research other break outs )
CL trades in a range and do break out .
a) if trading in a low price band , then wait for EIA inventory data day that is wednesday and based on the positive report ( good drawdown ) , initial action is price down for 1 hour . This is preparation for big break out MMs accumulation phase.
- also CL vs. ES/EURO divergence continued for 1 week, so it is high time for CL to catchup with ES/EURO gains so MMs are waiting for EIA report to break out ( we can plot chart the divergence , when it reach certain % , break out is immenent )
ex: lower band range price for 1 week ending 9/28/10
- break out happened on 9/29/10 after 1 hour of EIA good report
2. Seasonal Drag: CL ignores ES and EURO due to seasonal factors:
it happens for extended period of time for about 1 week to 10 days .
- Happened form 9/15/10 to 9/28/10 , the reason being 'CL seasonal DRAG ' verified with MRCI drag from AUG 15 to 9/30
- when CL ignores ES and EURO check the seasonal DRAG factor , inversly If CL rising with out ES and EURO same thing check Seasonal factor ..
3. Range bound days , good time to short is Moring after 2 to 3% gain
early moring is better for shorting after 2.5% raise , you have whole day to let CL reverse course ( at leaset temporarily ). Do this with the help of VP predicted high/low values and ATR stops amibroker
4. last week of Seasonal Pattern trade exit: see MRCI patterns and enter at last 5 days of the 'seasonal trade period'
ex: 7/10/10 to 9/30/10 NOV long seasonal trade is there , so when at 9/25 it is trading at 7/15 price enter it for low risk and good potential ( workig this year 2010 from 9/25 to 9/30 )
- this one also has month end date 30 th, so there is some magic to work on these month end and EIA day break out etc..
5. Enter spread only at uppper range : see my other notes for DEC 2012/2011 spread entery when CL price is high for current month.
6. Hurricanes: you can enter spreads when Hurrcane is fading ..
7. supply disruptions: when pipe broke on friday 9/17 the spread of OCT/NOV came down to few cents from $1 , so grap these kind of one ..
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This should provide ( see CL market analyst ) guidelines for my own market analysis template, since it came from a well established energy trading firm JOB description
As a Market Analyst, you will:
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mistakes done /lessons to learn
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1) 9/26 : did not have a stop , gave $1 always have stop for 30 cents else put
2) another $1 gave due to not knowing seasonal darg ( looking at ES and EURO donig good )
2) some time JULY last week in HYD: no stop gave $1 each on 2 contracts ( I am short and some gulf coast hurricane took it to $2 high no stop )
4) not knowing STOPLimit ( for overnight ) and STOP , I came to know recently with out it lost some and even after knowing did not implement 30 cent stop ..
5) did not follow ATR stops ( some days it did not work on PC amibroker , some days did not follow ) for entering ..
6) mainting : gains are 20 to 30 cents where are losses are $1 that is main factor ... no good Risk/reward Ratio .. for every entry I should have one
7) Bollinger bands and 9/50 EMA are good followed till some extentent ..
8) put/call protected LONG/short strategy works if followed strictly ...
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