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September Crude gaps $1.55 down on electronic opening
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September Crude gaps $1.55 down on electronic opening

  #1 (permalink)
Fortitudo et Honor
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September Crude gaps $1.55 down on electronic opening

So no one took my bait in the other thread about trying to guess which way crude would gap. I don't blame you, I'm not such a good fundamentals guy either.

What's kinda disgusting is the timing of the S&P announcement. I know that anytime you hold over a position, you're assuming risk, but S&P could have waited till Monday for the announcement. There were probably a lot of people that got hurt with that type of gap. I know one of my strategies I'm testing out had an open position and sure enough, I got dinged. (although this was the first negative gap outcome. The others have all been either positive or inconsequential as they were less than my stops).

If you're marginal reserve for holding over night is $6250 (most brokers bump the CME min) that's a 25% gap down in terms of sheer equity value.

That's like Apple gapping down from $380 to to $285....a $95 gap.

Just goes to show, that if you hold over the weekend, anything can happen.

"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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  #3 (permalink)
Membership Revoked
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RM99 View Post
So no one took my bait in the other thread about trying to guess which way crude would gap. I don't blame you, I'm not such a good fundamentals guy either.

What's kinda disgusting is the timing of the S&P announcement. I know that anytime you hold over a position, you're assuming risk, but S&P could have waited till Monday for the announcement. There were probably a lot of people that got hurt with that type of gap. I know one of my strategies I'm testing out had an open position and sure enough, I got dinged. (although this was the first negative gap outcome. The others have all been either positive or inconsequential as they were less than my stops).

If you're marginal reserve for holding over night is $6250 (most brokers bump the CME min) that's a 25% gap down in terms of sheer equity value.

That's like Apple gapping down from $380 to to $285....a $95 gap.

Just goes to show, that if you hold over the weekend, anything can happen.

You're stupid if you hold overnight without sufficient capital, or use options to hedge.

It's no surprise CL gapped down, I must have missed your other thread. But one can't position oneself when the market is closed, so speculation is kind of pointless. The next few days can be a roller coaster ride and the volatility can get crazy.

I've been betting on oil revisiting the 70s for a while, though. I see less demand ahead, but the ECB might screw up my puts...

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Total petroleum products supplied in the US hit a yearly high last week. 20.3 mil bpd. 2nd highest since Aug 2008.

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I would never hold crude overnight on leverage. If developed overnight strategies I would want enough funds in my account to cover entire value of contract. That may be excessive but the overnight game is a dangerous one on margin.

Anything can and will happen eventually.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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Fortitudo et Honor
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liquidcci View Post
I would never hold crude overnight on leverage. If developed overnight strategies I would want enough funds in my account to cover entire value of contract. That may be excessive but the overnight game is a dangerous one on margin.

Anything can and will happen eventually.

That's not really the issue.

The issue is that if you have a stop in place, and you were holding overnight, unless your stop was 155 ticks away from the close, you got jumped. You may have had enough capital to cover the kick to the crotch.

Most of the time, my overnight strategy stops are large enough to endure even very large gaps. (80+ ticks) but the timing of the S&P announcement really was kinda crappy, because once the market closed, you were stuck.

THAT in and of itself wasn't the worst part, the worst part was that they announced it at the BEGINNING of the weekend, so the press/analysists had an entire 48 hours to work up the hysteria and amplify the gap.

Had they announced on Sunday evening, the gap would have been much more muted. Had they announced on Monday, the market would simply absorb the information and instead of gapping instantly, it would gradually adjust.

Just goes to show the inherent risky nature of holding overnight and the more risk in holding over weekends.

Again, every gap before had been either positive or inconsequential for me. In the end, I'm still positive in terms of gap effects (I've made more profit off gaps than lost). But like I said, once the market closed, you were powerless to do anything but bite your nails and be ready on the trigger to adjust on Sunday evening.

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RM99 View Post
That's not really the issue.

The issue is that if you have a stop in place, and you were holding overnight, unless your stop was 155 ticks away from the close, you got jumped. You may have had enough capital to cover the kick to the crotch.

Most of the time, my overnight strategy stops are large enough to endure even very large gaps. (80+ ticks) but the timing of the S&P announcement really was kinda crappy, because once the market closed, you were stuck.

THAT in and of itself wasn't the worst part, the worst part was that they announced it at the BEGINNING of the weekend, so the press/analysists had an entire 48 hours to work up the hysteria and amplify the gap.

Had they announced on Sunday evening, the gap would have been much more muted. Had they announced on Monday, the market would simply absorb the information and instead of gapping instantly, it would gradually adjust.

Just goes to show the inherent risky nature of holding overnight and the more risk in holding over weekends.

Again, every gap before had been either positive or inconsequential for me. In the end, I'm still positive in terms of gap effects (I've made more profit off gaps than lost). But like I said, once the market closed, you were powerless to do anything but bite your nails and be ready on the trigger to adjust on Sunday evening.

Black swan you might wake up and owe the broker. My problem with leveraging overnight is the type of event that wipes you out even with stops. Unlikely but is possible. I have no problem with overnight positions but not using much leverage if any.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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rumors and news

I'd say this is an issue of not having a reliable news feed...... there were strong rumors from the pit and elsewhere (beginning at around 10am) that a downgrade would happen after the close. To my knowledge, those rumors continued to swirl all day long, and were strong enough to help spike 10-year yields to their largest single day rise this year.

I'm a technical trader, but it pays to be up on all current market news (and rumors)..... especially if you hold overnight.

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