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After a long few days of confusion and bugging the crap out of a advanced trader
This is the view im going with now....
why becuase aparently its the best way to track the latest invontery in the market and thats what we care out as day traders
Here is the view im using as of today
So at the moment im using competley back adjusted data though kenetic though all contracts
" I will follow my rules, I will take my stops, I will be disciplined and i will work with the market....NOT AGAINST IT! Professional mind control is the key"
Ben will do one thing for a while, then suddenly change
I mean we have been tracking a certain big picture on CL since x-mas now
But all of a sudden Ben has changed his view
For the right reason i expect and the trouble is Ben is on another plant to any of us
He completely understand all aspects of nearly everything it seems to me lol
So when Ben does some thing or say something....its for a very good reason and Ben has a logical perspective why
For me half the time i don’t understand but im slowly learning.....this year’s learning curve has been the steepest in my career so far
I mean to me logically my data was correct for my own reasons, it seemed logical to me with the previous levels we put in at the time on the contracts we were trading
But i dont fully understand how these markets work from a advance understanding on managing money and inventory correctly over a longer period
Any ways it kind makes sense to me now i know in depth a bit more why
" I will follow my rules, I will take my stops, I will be disciplined and i will work with the market....NOT AGAINST IT! Professional mind control is the key"
Broker: Advantage, Trading Technologies, OptionsCity, IQ Feed
Trading: CL, NG
Posts: 1,038 since Jul 2010
Thanks Given: 1,713
Thanks Received: 3,863
Here's the thing with Crude Oil. It rolls its contracts every month so, there becomes confusion as to how you would manage that. Theres no cash index to reference which makes it difficult. The question then becomes, should you use a continuous contract or should you be using the continuous contract that is back-adjusted?
Let's take an example that would provide some clarity. Suppose a hedge fund is short from say September 14th of last year. What are they doing from that point and how are they managing their position? They're rolling their position each month. The only way to accurately track the PnL on this would be by using a continuous back-adjusted contract. Although the back-adjusted contract produces a spurious price level from the past, it reflects an exact calculation of how the trade is with regards to PnL.
A straight forward continuous contract with no adjustments is a great way to track long term price levels which play more into a psychological aspect. For example, Crude trading above $100/barrel. But again, the problem with this is whether or not inventory cares about those levels.
What's important for intra-day trading? The most important points of reference for an intra-day trader are recent and current market sentiment. That means the previous few sessions have the most bearing in trade location. Does a gap from 3 months ago have a massive influence on where you take your trade that will last a few minutes? Maybe but I'd tend to lean more on recent sentiment. Is there resting inventory based on a standard continuous contract or is it based on the continuous back-adjusted contract? I'd say the later of the two as each month's contracts are being rolled.
I haven't changed or constantly changing what I'm doing contrary to what @greenr has stated. I have not and not certain if I ever will fully divulge the way I view and manage the markets. However, I enjoy helping others which is why I've been an active participant here. If I can help a few guys out with my experience, its a great feeling for me.
You have had the same view and prespective all along
Its just the views i have seen you publish and i have followed
" I will follow my rules, I will take my stops, I will be disciplined and i will work with the market....NOT AGAINST IT! Professional mind control is the key"
Broker: Advantage, Trading Technologies, OptionsCity, IQ Feed
Trading: CL, NG
Posts: 1,038 since Jul 2010
Thanks Given: 1,713
Thanks Received: 3,863
That's a great point. It really depends on what they're doing. Trading the further out months obviously allows for more time to have the trade on while not having to worry about rolling however, the front month will have the liquidity and many funds trade around their core position with the front month as a "hedge". Of course the term hedge fund is very broad but my point was with regards to what I just explained.
I was just reading through some James Dalton articles and came across one that he wrote about Buying and Selling Tails. Here is what he said:
"I have often commented that learning about buying and selling tails was one of the most costly concepts introduced to me. Tails are only one data point; however, when we first become aware of them they are so linear, visual, measurable, and intuitive, that we lean on them, seeing them as an actionable trading tactic. When our observations result in profitable trades, we become even more sensitive to their forming. We start to look for them, often at the expense of more important market -generated information that is developing. Said another way, our focus often
narrows to hone in on tails, much like when you buy a car and start to see your car model on the road everywhere. The car was always in your sight; what shifted was your focus."
Again, just like @Private Banker and other posters on here have mentioned, we have to look for more than just highlighting these tails.
