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High degree of confluence in CL
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High degree of confluence in CL

  #11 (permalink)
CL Assassin
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GaryD View Post
Gary, I've actually looked you up once before. "CL Assassin" caught my attention. I can't say that I have that level of confidence in CL yet. I am more the "CL occasionally kicks my butt" trader. But that is a great improvement from my previous "CL please don't hurt me", or before that "CL, WTF?" trader!

Great market, but requires a lot of determination to staty with it.

One thing that gave me more desire to take the long today is the multitude of confirming factors for short-term support in this area, the charts I posted at the start of this thread. I have not had much luck with any specific fib ratio or even confluence of ratios in a single time frame as a stand alone tool, but when you get a tight range in multiple time frames, particularly daily and intraday combined, I have found those to be very powerful when you throw in the high volume stop discussed.

The toughest part for me to learn to accept was being willing to attack what seems like a very strong countertrend move. But today's action I have found to nail CL's behavior to a T.

It seems you and I are not the only ones familiar with this setup, as when it works it explodes in our favor. Did you take this today?

Hey Gary,

Yeah, I like the "CL, WTF?", but it doesn't quite support the mindset I need to trade it well. Haha!

I was not trading until the last hour or so, but saw more than a few examples of this trade. I caught enough of this last push up to be happy; took a little more heat than I liked, but I was prepared to take a b/e on the entire trade if necessary. I am also very impatient, and thus as you can see did not let it play out as well as I should have, and originally expected it to.

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Have a good afternoon,
Gary

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  #12 (permalink)
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FYI - here's what I use as my main screen. Very similar to yours. Thanks for sharing Gary.



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  #13 (permalink)
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OK, so the long setup was valid this time around. As is my most common problem, I took the trade but closed out on a trailing stop (afraid of giving up too much profit) and missed the larger half of the move from 89.60s to 92.80s. The hardest part of trading to me is knowing not knowing when to get in, but when to stay in.

Here's where we are as of today. If crude is going to return to it's downward path, this is a good area for it to do so.

1) Crude just blew the overhead stops today around 91.45 and 92.41 (fuel it used getting up here), and
2) Is approaching the prior breakout point (supply), and
3) Is nearing the 61.8 retracement (resistance).

Again, not a signal to take a short trade, nor a signal to exit a long, but something to be aware of. It will go where it wants to go from here. Hopefuly it will give a good clue before it does...

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  #14 (permalink)
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AMAZING CHART DUDE, THANKS


Fat Tails View Post
So far it was a ping pong game between the confluence zones and both the retracments and the counter trend entries were tradeable. However, the retracements had a better reward-to-risk ratio. I am always a bit reluctant to take a counter trade, just because there is a confluence zone.

The specific setup may be a case for a long position, as

- CL 08-11 made a higher high and did not test the trend channel line
- there was a significant divergence on volume

If the long fails, and CL goes below the confluence area, the target would be around 85.50.

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  #15 (permalink)
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syxforex View Post
AMAZING CHART DUDE, THANKS

How exactly is that chart amazing? Also, the point that says higher low, is not actually yet a higher low, if price comes straight down, there will be no higher low.

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  #16 (permalink)
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monpere View Post
How exactly is that chart amazing? Also, the point that says higher low, is not actually yet a higher low, if price comes straight down, there will be no higher low.

@monpere: I agree that the chart is not amazing, and I did not pretend it. There are no amazing charts.

I just wanted to point out that there may be a case - nothing can be accurately predicted - for a long position. The higher low was actually followed by a lower low, as the lower end of the trading range was tested once more. So you are absolutely correct.

What was most important was the selling climax, that took place on June 23, and which was followed by a vague attempt of the bears to approach the lower end of the trading range generated by the high volume expansion bar. The bears approached that area two more times. Only after new bears and new bulls had been trapped - see Lower Low on the chart below - was territory cleared, and the bulls took over.

My main point was that a selling climax followed by a divergence often is a fine bull setup, and this is what happened.

Attached Thumbnails
High degree of confluence in CL-case-bulls.jpg  

Last edited by Fat Tails; July 11th, 2011 at 01:50 PM.
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  #17 (permalink)
Fortitudo et Honor
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Trading technicals on large charts/long range moves is inherently dangerous in an instrument like CL.

That's because the fundamental changes can jump out of the bushes and club you with a sock full of quarters.

Once you're outside the "negotiation" and range trading area, you're now in the realm of long term traders who don't really care much about technicals...other than maybe market profile.....

The Long Term traders are trying to reposition themselves for an advantageous position with respect to the fundamental change in the market....

So all the technical analysis in the world goes RIGHT out the window when there's something like the Greek debt crisis, Lybian civil war, Egyptian turmoil, Japanese Earthquakes or Obama making political statements by releasing the SOR.

I suppose you COULD wait for price action/confirmation, but even then....the problem with these long term plays is that you're stop loss has to be significant (and hence, your profit targets even larger) and thus you're "exposed" to fundamental threats longer.

For a "normal" market, that's undergoing moderate to no fundamental changes, I say....technicals work just like they work in the smaller picture....but how often does an volitile instrument like CL remain that way?

In essence, the only way to play long term technicals is if you can stomach the large P/L values with a large account.

Otherwise, you're simply throwing dice down a craps table hoping some news event doesn't ruin your week.

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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  #18 (permalink)
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RM99 View Post
Trading technicals on large charts/long range moves is inherently dangerous in an instrument like CL.

That's because the fundamental changes can jump out of the bushes and club you with a sock full of quarters.

Once you're outside the "negotiation" and range trading area, you're now in the realm of long term traders who don't really care much about technicals...other than maybe market profile.....

The Long Term traders are trying to reposition themselves for an advantageous position with respect to the fundamental change in the market....

So all the technical analysis in the world goes RIGHT out the window when there's something like the Greek debt crisis, Lybian civil war, Egyptian turmoil, Japanese Earthquakes or Obama making political statements by releasing the SOR.

I suppose you COULD wait for price action/confirmation, but even then....the problem with these long term plays is that you're stop loss has to be significant (and hence, your profit targets even larger) and thus you're "exposed" to fundamental threats longer.

For a "normal" market, that's undergoing moderate to no fundamental changes, I say....technicals work just like they work in the smaller picture....but how often does an volitile instrument like CL remain that way?

In essence, the only way to play long term technicals is if you can stomach the large P/L values with a large account.

Otherwise, you're simply throwing dice down a craps table hoping some news event doesn't ruin your week.

Love your comments.

There is a old argument between technical and fundamental traders. Of course, both positions can be defended, and a trader who knows both the fundamentals and technicals of a market should have an advantage compared to fundamental-only or technical-only traders.

Technical traders assume that the current news is factored in. The Greek debt crisis is not really a big deal. It does not even match the bailout cost for Fannie Mae and Freddie Mac.... But of course, things add up one by one, whether it is in the US or in Europe. The Libyan Civil War and the Japanese Earthquakes came sort of unexpected. But they would have caught you in surprise even as a fundamental trader.

Trading can be similar to throwing dice, when the markets are showing random movements. A selling climax is a fat tail and shows that the market has not been in a random mode, so it can be exploited.

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  #19 (permalink)
Fortitudo et Honor
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Fat Tails View Post
Love your comments.

There is a old argument between technical and fundamental traders. Of course, both positions can be defended, and a trader who knows both the fundamentals and technicals of a market should have an advantage compared to fundamental-only or technical-only traders.

Technical traders assume that the current news is factored in. The Greek debt crisis is not really a big deal. It does not even match the bailout cost for Fannie Mae and Freddie Mac.... But of course, things add up one by one, whether it is in the US or in Europe. The Libyan Civil War and the Japanese Earthquakes came sort of unexpected. But they would have caught you in surprise even as a fundamental trader.

Trading can be similar to throwing dice, when the markets are showing random movements. A selling climax is a fat tail and shows that the market has not been in a random mode, so it can be exploited.

I agree, all I'm saying is that things like the Greek Debt Crisis for example....

You're right, the market had it factored in, that it was going to get done/passed...but that morning, when a member of the ruling party broke ranks and voted against...there was a brief moment of market anxiety and CL literally shot half a dollar south in 10 seconds, then as it became clear that there was an equally offsetting vote on the opposition side, the market returned back to normal.

So my point was not whether either (fundamentals or technicals) were valid or invalid....my point was that if you're trading technicals (which can be valid in any time frame) the danger of fundamental changes is more pronounced when trading large charts.....as your profit targets and stops are larger and you're in the market longer (and exposed longer).

There's nothing wrong with trading the market with long term technicals...just be prepared for a bumpy and counterintuitive ride sometimes...that's all I'm saying.

Large accounts can do this....smaller accounts should stick to sniping range trading opportunties and technicals in the "negotiation" ranges.

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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  #20 (permalink)
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GaryD View Post
To share my personal take on risk/reward;

I track CL's swings over the past 90 days, and break them into percentages of how often they occur. For example, as of last week, the "average" swing (calculated using a 9 Renko as it is easier for me to filter out noise when reviewing past moves, and I like a swing size that coincides with my time frame and risk I am willing to take) is $593.20. However, even though that is the current "average", it only occurs 39% of the time. I shoot for a target 1 of at least a 50% occurence, which currently is roughly $500.00 (50.61%). I do not try to pick the tops and bottoms and enter only after a reversal, so my profit target is almost always less than my swing target, as the swing has already started before I get in.

I'd obviously prefer $1,000.00 in terms of my target swing, but the occurence of that size swing is currently only at 9.15% of the time. If I took every swing (which I don't), and If I thought I could enter on the low tick (which I have proven too many time I can't), I would have to have a $100.00 stop to break even (after costs). While that is not how I trade, I try to always be aware of the probabilities.

Of course there are other factors that improve the actual odds of "this time" being the one that makes it to $1,000.00 or beyond, and that is where I try to use confluence zones to help me. What I have found is that confluence zones and elliot sturtcure just gives you something to believe in, which helps keep your mind in the right direction to stay in a move. It may not improve your chances of being "right", but it can still improve your chances of success.

This is great information, thank you for sharing. Could you please give more detail on how you track the swings by timeframe, and % of occurrence? How does your risk relate to your target 1 and your target swing in terms of % occurrence, and how much of your position do you scale out?

I am at a point where I am able to get decent entries on CL, with a small risk, that easily can run to 20, 30, 40, 50, 60 ticks, and rarely, I can catch the big swings of 100, 200, 300 ticks, however I am always battling myself on where to take profit, and most often end up giving most of my unrealized profit back in hopes of hitting a swing. Thus, my win rate is really low.

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