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So I am now SHORT oil again. It is actually about $1 lower now than when the futures market opened.
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duc
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duc's Commodity Trading Thread
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So this was posted in the other 'oil' thread:
The most important figure to look at is the total Open Interest. That means how many contracts have been written between the buyers and the sellers for that week. When the price of oil, is going up then the producers will be selling more as the buyers can see the price is going up, so they want to buy more at the lower price. This is when you will see a lot of OI (contracts). However when the price is falling the buyers buy less because they are waiting for a better price, therefore as the OI falls, it tells you fewer contracts will be opened.
So the important thing to look out for are Open Interest Orders falling or rising. Where you see short sellers they tend to be the suppliers who are selling their wares to those who are going long, the buyers. You must have a buyer to equal a seller. It is a two sided contract.
Open interest [OI] is the total number of open contracts at the close of trading. That is the total number of contracts long or short, not the COMBINED total.
Futures contracts are zero sum. This means that each contract [OI] must have a buyer and a seller. OI will increase by 1 when a new buyer buys from a new seller. There must be a new position for OI to increase.
OI will decrease by 1 when an existing long [who liquidates] sells to an existing short [who covers].
Any transaction that involves one existing and one new participant has NO EFFECT on the OI interest.
So OI is a volume indicator. However, unlike a volume indicator, it tells you whether the volume is very bearish or very bullish, or simply meh. The 'VERY' is calculated against the highest volume and the lowest volume of the last 3 years as a %.
This information is contained in the COT chart that I post. The tug of war predominantly exists between the commercials, who are charted and the big Funds, who can also be charted, but do not show on the posted chart. They are the raw number that I post.
The third number that is obviously important is the actual commodity price.
Last week, as the numbers are all lagging on the COT, we have had a situation where the commercials have been buying circa 90% of their highest historical volumes and price has declined [albeit more slowly last week] in the face of this commercial buying. This is due to the very high Fund shorting.
Funds [tend to be] are momentum traders. The algorithms jump on trends reinforcing them until they end and then [potentially] reverse or cover.
This weeks number [last week in reality] was an increase of SHORT OI. This explains last weeks decline.
However, for whatever [unknown] reason, this number very often persists into the current week. Of course it is far from infallible, but it is regular enough to use it [along with other variables] as a trading signal.
jog on
duc
The most important figure to look at is the total Open Interest. That means how many contracts have been written between the buyers and the sellers for that week. When the price of oil, is going up then the producers will be selling more as the buyers can see the price is going up, so they want to buy more at the lower price. This is when you will see a lot of OI (contracts). However when the price is falling the buyers buy less because they are waiting for a better price, therefore as the OI falls, it tells you fewer contracts will be opened.
So the important thing to look out for are Open Interest Orders falling or rising. Where you see short sellers they tend to be the suppliers who are selling their wares to those who are going long, the buyers. You must have a buyer to equal a seller. It is a two sided contract.
Open interest [OI] is the total number of open contracts at the close of trading. That is the total number of contracts long or short, not the COMBINED total.
Futures contracts are zero sum. This means that each contract [OI] must have a buyer and a seller. OI will increase by 1 when a new buyer buys from a new seller. There must be a new position for OI to increase.
OI will decrease by 1 when an existing long [who liquidates] sells to an existing short [who covers].
Any transaction that involves one existing and one new participant has NO EFFECT on the OI interest.
So OI is a volume indicator. However, unlike a volume indicator, it tells you whether the volume is very bearish or very bullish, or simply meh. The 'VERY' is calculated against the highest volume and the lowest volume of the last 3 years as a %.
This information is contained in the COT chart that I post. The tug of war predominantly exists between the commercials, who are charted and the big Funds, who can also be charted, but do not show on the posted chart. They are the raw number that I post.
The third number that is obviously important is the actual commodity price.
Last week, as the numbers are all lagging on the COT, we have had a situation where the commercials have been buying circa 90% of their highest historical volumes and price has declined [albeit more slowly last week] in the face of this commercial buying. This is due to the very high Fund shorting.
Funds [tend to be] are momentum traders. The algorithms jump on trends reinforcing them until they end and then [potentially] reverse or cover.
This weeks number [last week in reality] was an increase of SHORT OI. This explains last weeks decline.
However, for whatever [unknown] reason, this number very often persists into the current week. Of course it is far from infallible, but it is regular enough to use it [along with other variables] as a trading signal.
jog on
duc
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Added a SHORT @ $910.75 Soybeans. Nice set-up. Probably looking to hold only for a day or two.
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A target of $900'ish.
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Close Oil SHORT.
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Close Soybean SHORT
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So some news out re. proposed oil cuts:
OPEC+ gears up for production cut. Russian President Vladimir Putin said over the weekend at the G20 summit that Russia has agreed to go along with a production cut in Vienna. The size of the cut is undecided at this point. Saudi Arabia wants something more aggressive, but is also wary of angering Washington. Most analysts predict a middle-of-the-road production cut. “Given Saudi Arabia’s need to balance a host of conflicting interests, our basecase scenario is a de-facto Saudi-led cut with Russian participation, but a flexible agreement that shies away from specific targets,” Verisk Maplecroft said in a note to clients. Saudi oil minister Khalid al-Falih said on Tuesday that it was still “premature” to lay out the specifics of the deal.
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OPEC+ gears up for production cut. Russian President Vladimir Putin said over the weekend at the G20 summit that Russia has agreed to go along with a production cut in Vienna. The size of the cut is undecided at this point. Saudi Arabia wants something more aggressive, but is also wary of angering Washington. Most analysts predict a middle-of-the-road production cut. “Given Saudi Arabia’s need to balance a host of conflicting interests, our basecase scenario is a de-facto Saudi-led cut with Russian participation, but a flexible agreement that shies away from specific targets,” Verisk Maplecroft said in a note to clients. Saudi oil minister Khalid al-Falih said on Tuesday that it was still “premature” to lay out the specifics of the deal.
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Long Cocoa
*amend that, my order does not seem to be going through
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*amend that, my order does not seem to be going through
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Long Palladium
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Close Palladium
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LONG oil. This is an overnight position.
So just a quick [rough & ready] update: Oil SHORT [-] Soybean SHORT [-] Palladium LONG [+]
Where [-] = a loss and [+] = a profit
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So just a quick [rough & ready] update: Oil SHORT [-] Soybean SHORT [-] Palladium LONG [+]
Where [-] = a loss and [+] = a profit
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duc
tech/a
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Duc
These trades don’t seem to follow the longer term
Method first introduced. Using long and short hold data.
More news based short term - very short term.
These trades don’t seem to follow the longer term
Method first introduced. Using long and short hold data.
More news based short term - very short term.
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The oil trades are the trades I use the COT for. While it is an important variable, I am not a slave to it. Today [oil] is more a technical/news based position. Also, given that the COT is lagging and there are issues at turning points, I am exercising my discretion. Discretion = gut feel = guess. I feel lucky. Especially now that I am on the same side of the trade as Mr Sadjii
Turning points are choppy. Once I can jump on a trend, then COT is helpful. For the moment, I think we are at at least a bounce in oil. Whether it takes hold, I have no idea.
Soybeans and Palladium were just quick opportunities that were available. I may look at the COT data for Soybeans, I quite like this commodity, particularly that Gold is currently choppy.
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duc
Thanks for your thread Duc.
I have never thought about trading this way before.
If it is not too much trouble, is it possible for you to include profit/loss in R multiples when you close a trade? Example: close Soybean +10R
tech/a
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Quick update:
I was on the verge of puking up oil, but I am fingertips in this trade, but not happy. I blame Mr Sadjii.
I added Orange Juice at $140.71. I'll hold this until at least tomorrow then make a decision.
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I was on the verge of puking up oil, but I am fingertips in this trade, but not happy. I blame Mr Sadjii.
I added Orange Juice at $140.71. I'll hold this until at least tomorrow then make a decision.
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duc
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Thanks for your thread Duc.
I have never thought about trading this way before.
If it is not too much trouble, is it possible for you to include profit/loss in R multiples when you close a trade? Example: close Soybean +10R
It was never really my intention to day-trade, but it seems to have worked out that way somewhat. What I'll do from next week is screen-shoot the entry and exit and add them to the post. That is probably more use than anything else.
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So oil, added to position. You can see my shocking first entry, which is why I was seriously close to puking it up.
Second entry far better, although still no guarantee of anything.
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Second entry far better, although still no guarantee of anything.
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So I exited all positions Oil x 2 and OJ. for the weekend. Both were [+]
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