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Trading Oil on MT4
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Trading Oil on MT4

  #1 (permalink)
Elite Member
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Trading Oil on MT4

Hi everyone,

I have started following a method of trading Oil on MetaTrader which i want to discuss here and would like to get feedback from members.

I have traded CL and other Futures instruments on Ninja and have found it to tough going. Scalping is tough and not for everyone. Though the lure of good profits brings every one in but we find out soon that its not that easy and could lose all of it soon.

We all know that we make or lose money when we are in the market and when we are just watching the price action with all the volatile moves, if we are not in the market we don't get anything. There could be huge profitable moves which we just watch sitting on our seats and are reluctant to jump in because we are not able to find an entry or are just plain scared that it might just bounce back. More so when we are not on our seats in front of the computers, we miss many moves then too. Essentially we are out of the market most of the time and are in just for a few minutes when we are scalping.

I have started trading with a different style. I would like to hear comments/warnings/advice from you , please.

I have started trading WTICOUSD CFD on Metatrader4 with Oanda with a big account. My opinion is that Oil is on the uptrend and will surely not go to $26 per barrel. From $46 to $26 a barrel is like $20 difference which with one futures contract is like $20000 . If my account size is 10 times bigger than $20000 then i don't need to worry about how low the price will go.

At the start of the week i take a position long with a contract and it goes against me, i never close the position and add half contracts when i see the next long signal , slowly adding half contracts if it keeps going against me at each long entry.
On the way down , going against me, wherever i enter long and make money on that particular trade, i close it on profit and keep adding half lots on the way down. If there are strong sell entries, i go short and make money on those positions too, but if the short entries go against me, i close them with a small stop loss.


What i plan to do is that if there is a short entry, i go short and it starts to go up, instead of closing this short entry at a loss, i go long with double the size of the short entry. So not only i recover the loss which i made while waiting for the price to go down, i make money on the way up cuz this one was double the size of the short entry. If this long entry stops going up, i close this long position in profit and wait for it to go down for the last short entry. I could even close the short entry right then because the loss would have been made up the double sized positon or wait for it go down if the downtrend persists.

The long term trend of oil is up but there could be short term downtrends where there are opportunities to make money by going short and waiting for the trend to go back up with all the open positions making money on the way up. The long entries on the way down are added at key support/resistance points and at strong buy entries looking at Market Profile and Order Flow combinations. I also set buy limit orders at key S/R points when i'm not infront of the computer but the gap is higher compared to when i'm sitting in front of the computer with smaller mini lots.

This way i'm in the market for long periods of time. I set Take Profits orders at key S/R levels if i'm not in front of the computer or when i'm sleeping. When the price starts to go up, i add in more contracts and make it worthwhile the wait.

This way of trading is getting me very good returns and i'm making good money with it. The cost of trading CFDs is way higher than trading Futures contracts but when you are in the market for longer times, this cost is negligible, plus you could adjust the lot sizes and hedge your positions too. I believe this is only possible if you have a big account so you could take the heat. There are very few stop losses because either the price is going up or in a range trying to go up.

I'm based in Canada and off course we can trade CFDs here. I would like any one to say a few words about this way of trading. I'd really appreciate if some one could suggest some kind of formula or calculation to set up lot sizes, so that in case of a prolonged downtrend to $26 a barrel (which does not seem likely in the near future and current conditions), i could still survive the heat.

Thanks

Asher


Last edited by asherrizwan; May 14th, 2016 at 06:59 PM. Reason: spelling
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  #2 (permalink)
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  #3 (permalink)
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asherrizwan View Post
I have started following a method of trading Oil on MetaTrader which i want to discuss here and would like to get feedback from members.

I have traded CL and other Futures instruments on Ninja and have found it to tough going. Scalping is tough and not for everyone.


This is true, but I don't understand how it relates to whether you're using MT or NT.



asherrizwan View Post
This way of trading is getting me very good returns and i'm making good money with it.


Are you trading a method with a proven edge?



asherrizwan View Post
I'd really appreciate if some one could suggest some kind of formula or calculation to set up lot sizes


I've found that a combination of trading a method with a proven edge and never exposing more than 1% of my account to risk at a time is successful over the long term.

I wish you well with your trading, but don't pretend really to understand what you're doing and why, overall, and with no impoliteness intended at all, I don't really agree with the small parts I do understand.

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  #4 (permalink)
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Tymbeline View Post
This is true, but I don't understand how it relates to whether you're using MT or NT.


Are you trading a method with a proven edge?


I've found that a combination of trading a method with a proven edge and never exposing more than 1% of my account to risk at a time is successful over the long term.

I wish you well with your trading, but don't pretend really to understand what you're doing and why, overall, and with no impoliteness intended at all, I don't really agree with the small parts I do understand.


The purpose of using MT instead of NT is that you could trade Long or Short at the same time (hedging), close individual open positions in profit/loss without getting averaged on price as its done on NT, and if need be, take mini lot positions which is not possible in NT.

I have started following this way of trading for the simple reason of being in the market for longer periods of time with open positions to capture movements in Oil even when i'm not in front of the computer. With Take Profits set on open positions and a long term up trend, the take profit targets keep hitting regularly. Only one long position is not set up with a TP so that a potential huge movement up is captured.

I dont' know what did you mean by a method with a proven edge, there might be some similar methods like this and that's the purpose of this thread, to get ideas and hear experiences from others.

You mention that you don't agree with some parts , could you please elaborate a little. I will try to explain a little better. The main idea of trading like this is to be in the market with open positions to capture all the movement going up and if its going down, then open up distant smaller positions at key points to wait for them to go up when i'm not in front of the computer. If i'm at the computer, then even short positions could be opened up if there are strong entry points going down.

I am new at this and would like to hear comments/warnings/disagreements and any ideas to make it better. If some one knows of any formula/calculator for lot sizing please let me know.

Thanks


Last edited by asherrizwan; May 15th, 2016 at 05:09 PM.
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  #5 (permalink)
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Ironic that you posted this since I was about to post a new thread regarding something similar, with pics of results. Watch for it.

I have heard of CFDs before but do not know what they are and don't really care.. (I am in the USA)


Quoting 
At the start of the week i take a position long with a contract and it goes against me, i never close the position and add half contracts when i see the next long signal , slowly adding half contracts if it keeps going against me at each long entry.
On the way down , going against me, wherever i enter long and make money on that particular trade, i close it on profit and keep adding half lots on the way down. If there are strong sell entries, i go short and make money on those positions too, but if the short entries go against me, i close them with a small stop loss.

Slowly scaling into a losing trade in futures on a strong opposite trend is extremely dangerous. I mean totally out of the ball park. Before you know it, you are 30 or 40 contracts deep into a position that you have no hope of maintaining overnight, unless you have a boatload of capital behind you. (read: mid-to-upper 6 digits)


Quoting 
I have started trading WTICOUSD CFD on Metatrader4 with Oanda with a big account. My opinion is that Oil is on the uptrend and will surely not go to $26 per barrel. From $46 to $26 a barrel is like $20 difference which with one futures contract is like $20000 . If my account size is 10 times bigger than $20000 then i don't need to worry about how low the price will go.

If your account is 10X bigger than $20,000, so $200,000 in cash value, you don't have to worry about the price at all. If you held a lomg contract now for WTI Globex in 2017, the price would have to drop to negative numbers to wipe you out. And that ain't happening. But at least by speculating long on such a long-forward contract month, you can sit on it for quite a long while with your target price set and not worry about it, before deciding to bail. You are only on the hook for the single contract maintenance margin, plus the initial minus unrealized PnL of the account on each day of close. If you entered long 1 ct at $40 CL, with $200K in account, if it dropped to zero (free oil, woohoo!), you would be on the hook for $40K + maintenance, which though my broker is ~$3350. So $200K-$40K-$3350. That leaves you with $156.5K cash left to trade with in other instruments/months.

Your comments about hedging I would like to tackle another day, because I did not know you could hedge in the futures market (not futures options, just straight futures).


Last edited by HoopyTrading; May 17th, 2016 at 12:25 AM.
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  #6 (permalink)
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If you trade FX/CFDs, etc. and you call buying/selling a contact in an opposite direction "hedging" is just plain wrong as terminology and strategy. There is no "hedging", a trade in an opposite direction is a profit taker or a loss. PERIOD.

If you have a losing position and you decided to take a position in the opposite direction, you just locked your loss.
Sooner than later, to untangle it, you will realize the loss. You can't turn losing trades into winning trades in the long run with "hedging strategies". In the USA "Hedging" is not allowed for a reason and it is a very smart one.

Matt Z
Optimus Futures and Fx

There is a substantial risk of loss in futures and forex trading. Past performance is not indicative of future results.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #7 (permalink)
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HoopyTrading View Post
Ironic that you posted this since I was about to post a new thread regarding something similar, with pics of results. Watch for it.

I have heard of CFDs before but do not know what they are and don't really care.. (I am in the USA)



Slowly scaling into a losing trade in futures on a strong opposite trend is extremely dangerous. I mean totally out of the ball park. Before you know it, you are 30 or 40 contracts deep into a position that you have no hope of maintaining overnight, unless you have a boatload of capital behind you. (read: mid-to-upper 6 digits)

Thanks for your comments. I agree about scaling into a losing position on a strong opposite trend could be dangerous. But what i'm suggesting and doing for Oil , is to expect the long term trend going up and when it goes down on a short term, add in more contracts and wait for it to go up. With CFD's , the pip/tick value for a single contract in Oil is just $1 and not $10 as with a standard Futures contract. So even when i'm scaling in with 3-5 contacts, its not like taking 3-5 full contracts in Futures market.


HoopyTrading View Post

If your account is 10X bigger than $20,000, so $200,000 in cash value, you don't have to worry about the price at all. If you held a lomg contract now for WTI Globex in 2017, the price would have to drop to negative numbers to wipe you out. And that ain't happening. But at least by speculating long on such a long-forward contract month, you can sit on it for quite a long while with your target price set and not worry about it, before deciding to bail. You are only on the hook for the single contract maintenance margin, plus the initial minus unrealized PnL of the account on each day of close. If you entered long 1 ct at $40 CL, with $200K in account, if it dropped to zero (free oil, woohoo!), you would be on the hook for $40K + maintenance, which though my broker is ~$3350. So $200K-$40K-$3350. That leaves you with $156.5K cash left to trade with in other instruments/months.

Your comments about hedging I would like to tackle another day, because I did not know you could hedge in the futures market (not futures options, just straight futures).

That is exactly the reason i'm working on this kind of method , because of the account size. The calculations you've done are perfect but for a standard futures contract, its different and much safer with CFD trading. I'm trading with smaller lot sizes to work on this method and see how it goes. I've been lucky i suppose with the price of Oil going up the last few days, i just have to observe this methodology and see the results.

Thanks

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  #8 (permalink)
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mattz View Post
If you trade FX/CFDs, etc. and you call buying/selling a contact in an opposite direction "hedging" is just plain wrong as terminology and strategy. There is no "hedging", a trade in an opposite direction is a profit taker or a loss. PERIOD.

If you have a losing position and you decided to take a position in the opposite direction, you just locked your loss.
Sooner than later, to untangle it, you will realize the loss. You can't turn losing trades into winning trades in the long run with "hedging strategies". In the USA "Hedging" is not allowed for a reason and it is a very smart one.

Matt Z
Optimus Futures and Fx

There is a substantial risk of loss in futures and forex trading. Past performance is not indicative of future results.

Thanks for your comments. I agree with what you've written totally and will get this idea of "hedging" out of my head. I have tried it in the past with mixed results but when ever i get stuck with two open opposite trades , its not a good feeling to say the least.

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  #9 (permalink)
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asherrizwan View Post
Thanks for your comments. I agree with what you've written totally and will get this idea of "hedging" out of my head. I have tried it in the past with mixed results but when ever i get stuck with two open opposite trades , its not a good feeling to say the least.

You are most welcome. Thank you for being open minded about my suggestion because there is about 1 trader that is open minded about the poor risk management of "hedging" versus 100 that say that they could untangle a loss in a winner.

I see that you use MT4, and recently I started learning it and offering it.
Now I see why most FX guys use it. very easy and free, broker-neutral. etc. nice

Matt Z
Optmus Futures and FX

There is a substantial risk of loss in futures and forex trading.Past performance is not indicative of future results.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.

Last edited by mattz; May 18th, 2016 at 12:46 AM.
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mattz View Post
You are most welcome. Thank you for being open minded about my suggestion because there is about 1 trader that is open minded about the poor risk management of "hedging" versus 100 that say that they could untangle a loss in a winner.

I see that you use MT4, and recently I started learning it and offering it.
Now I see why most FX guys use it. very easy and free, broker-neutral. etc. nice

Matt Z
Optmus Futures and FX

There is a substantial risk of loss in futures and forex trading.Past performance is not indicative of future results.

Hi @mattz,
Interesting to read that you are looking at MT4 and offering it to clients. I have read a lot of good and negative opinions of MT4, the most worrying being that there are built in broker only software modules that allow the broker to manipulate the price to the detriment of the client. I'm not suggesting that you would ever get involved in anything like that but I'd be interested in your findings.

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