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The PandaWarrior Chronicles
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The PandaWarrior Chronicles

  #1121 (permalink)
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PandaWarrior View Post

2. Crude oil is a wild beast as you know, some days its very directional either long or short for 200-300 ticks and simply entering and holding all day is the best option. Other days, it will run 100 ticks up, then 100 ticks down and then back up again. Other days, it simply grinds out an 80 tick range with no trending direction at all. Still other days you get a 100 tick burst and then sideways the rest of the day.

3. The way I see it, there are a few ways to approach trade management. (this assumes all targets are larger than the stops).
A) All in all out scalping for a few ticks. Say 5-10 ticks per trade
B) All in all out looking to trade legs in a move. Say 15-30 ticks per trade. 2-4 trades per move/trend
C) All in all out, trying to capture a large infrequent move that makes your week with many small stops or BE
D) Scale into #C with small size, wait for the move to happen, add to it on the pull backs. Trail out at a reversal.
E) All in scale out to eliminate risk quickly and let a small runner go. Trail out at a reversal.
F) Variations on all of the above but I think this captures the main ones.

Hi @PandaWarrior, nice journal and fantastic discussion here. Would love to hear how/when you think these different methods of trade management should be applied when trading crude, given its behavior.

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  #1122 (permalink)
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Hi @PandaWarrior, nice journal and fantastic discussion here. Would love to hear how/when you think these different methods of trade management should be applied when trading crude, given its behavior.

I'm glad you've enjoyed the thread so far.

As to when & how it's appropriate to use these trade management methods, I have my opinions but truthfully, I think depending on what you are trying to accomplish, how much time you have each day and what your temperament is, anyone of these can work for you.

My post is an attempt to solicit professional advice so I hope we will hear from @tigertrader soon.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #1123 (permalink)
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PandaWarrior View Post
2. Crude oil is a wild beast as you know, some days its very directional either long or short for 200-300 ticks and simply entering and holding all day is the best option. Other days, it will run 100 ticks up, then 100 ticks down and then back up again. Other days, it simply grinds out an 80 tick range with no trending direction at all. Still other days you get a 100 tick burst and then sideways the rest of the day.

Hello PandaWarrior. the success of your MTF approach to trade crude depends on how well crude trends on a given day. and the fact is crude does not trend well everyday, hence the struggles and occasional losing days. but why limit yourself to crude only? why don't you have multiple instruments available and everyday pick the best trending one to trade? surely a man of your level of trading experience can find the (comparatively) best trending futures instrument at a glance. wouldn't it making trading a bit easier then?

here is an example of last Friday's GC and CL, you can see that before market opened in USA, GC was clearly trending better than CL. and it remained so throughout the day.

and there is also an added benefit. by picking the best trending instrument to trade, or waiting for one to develop, it's easier to bypass those not so good opportunities, and stack more odds in your favor.

I'm probably only pointing out the obvious to you, you are certainly a much more experienced trader than me. I've just began to experiment with trading this way, so if you've explored this already, could you maybe share your findings?

Best Regards

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  #1124 (permalink)
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iPlayGames View Post
Hello PandaWarrior. the success of your MTF approach to trade crude depends on how well crude trends on a given day. and the fact is crude does not trend well everyday, hence the struggles and occasional losing days. but why limit yourself to crude only? why don't you have multiple instruments available and everyday pick the best trending one to trade? surely a man of your level of trading experience can find the (comparatively) best trending futures instrument at a glance. wouldn't it making trading a bit easier then?

here is an example of last Friday's GC and CL, you can see that before market opened in USA, GC was clearly trending better than CL. and it remained so throughout the day.

and there is also an added benefit. by picking the best trending instrument to trade, or waiting for one to develop, it's easier to bypass those not so good opportunities, and stack more odds in your favor.

I'm probably only pointing out the obvious to you, you are certainly a much more experienced trader than me. I've just began to experiment with trading this way, so if you've explored this already, could you maybe share your findings?

Best Regards

I respect those that can do this but I find I have enough on my plate with CL. For me the old chinese proverb that says man that chases two rabbits loses both applies to me. Besides, my screen space is insufficient to accommodate three screens plus a Dom for more than one instrument.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #1125 (permalink)
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The answer is simple, Brain. If I'm long and I think the market is going higher, I am looking to add to my position. If I'm short and I think the market is going lower, I am looking to add to my position. Its pretty automatic for me and really doesn't require much conscious thought. The reason that it has become so instinctual is that I know my game. I have a pretty good understanding of current price action and how it relates to the overall context of the market and this allows me to have a gauge on the duration and distance of the trade. Scaling out of a profitable trade, obviously provides the trader with more flexibility and expands his choices. Do I look to add on every trade I make? Of course not. I look to add when conditions have become favorable to support pressing and adding. Nevertheless, it does not mean that it will work. The difference between unsuccessful traders, net-profitable traders, and big money making traders is smaller than you think. It usually boils down to a small but perceptible edge, and while it can be related to poor money management, inadequate knowledge of the market, or a bad methodology, it is usually an internal factor - a lack of: discipline, emotional control, patience, and especially an improper attitude about losing and risk.

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  #1126 (permalink)
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tigertrader View Post
The answer is simple, Brain. If I'm long and I think the market is going higher, I am looking to add to my position. If I'm short and I think the market is going lower, I am looking to add to my position. Its pretty automatic for me and really doesn't require much conscious thought. The reason that it has become so instinctual is that I know my game. I have a pretty good understanding of current price action and how it relates to the overall context of the market and this allows me to have a gauge on the duration and distance of the trade. Scaling out of a profitable trade, obviously provides the trader with more flexibility and expands his choices. Do I look to add on every trade I make? Of course not. I look to add when conditions have become favorable to support pressing and adding. Nevertheless, it does not mean that it will work. The difference between unsuccessful traders, net-profitable traders, and big money making traders is smaller than you think. It usually boils down to a small but perceptible edge, and while it can be related to poor money management, inadequate knowledge of the market, or a bad methodology, it is usually an internal factor - a lack of: discipline, emotional control, patience, and especially an improper attitude about losing and risk.

I accept the simplicity. Easier to say than do of course but still, very simple.

On a larger time frame like a daily chart I can see how this approach might be simpler to do vs an intra day chart. However, if it is doable on a daily, it's doable on a smaller time frame.

What you've said reminds me of the Phantom of the Pits. The basics was be wrong small and be right big. That only happens by adding to winners as aggressively as your risk and money management rules allow. On a straight trend day, you stand to make a fortune and on range bound days you scratch or have small losses. Is this correct? What about the idea many traders have of sacrificing the occasional big move in exchange for many smaller and more frequent trades while attempting to be more accurate with timing?

The next issue a trader must address is the understanding of market structure and what the potential exit zones should be. You can add till the cows come home but if you don't have pre determined exits, you'll work hard and end up break even when price eventually comes back on you as it inevitably will.

It sounds like the edge exits primarily in simply pressing the trade when your right combined with appropriate risk management when your not. Everything else is either a scalp with small size or acceptable losses while you probe the market.

Speaking of losses, I still dislike them but recognize them as the cost of doing business and the result of imperfect knowledge about uncertainty. The losses that bother me are the ones that happen as a result of my interference of a perfectly good trade. These losses are becoming more rare for me thankfully.

From an intra day standpoint, my next questions are:

1. When long, how do you look to add? Is it possible breakouts, buy the dips, or like some one I saw once, buy the bottoms of all the red bars or buy the tops of all the green bars in an established trend? Or all the above?

2. The exit. Do you look for exit zones based on market structure or do you simple stay in until you'd rather be short and give up some portion of the move.

3. Assuming you are long small and before you start adding, stops are important from a possible catastrophic standpoint. However, do you recommend stops be placed just below the action with the thought you are right about direction and wrong about timing and you need to allow for price to further work itself in your direction or do you recommend the stop be placed well away from the action to allow for price probing those "retail" stop placement areas?

Thank you for your answer and willingness to help.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #1127 (permalink)
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PandaWarrior View Post
From an intra day standpoint, my next questions are:

1. When long, how do you look to add? Is it possible breakouts, buy the dips, or like some one I saw once, buy the bottoms of all the red bars or buy the tops of all the green bars in an established trend? Or all the above?

2. The exit. Do you look for exit zones based on market structure or do you simple stay in until you'd rather be short and give up some portion of the move.

3. Assuming you are long small and before you start adding, stops are important from a possible catastrophic standpoint. However, do you recommend stops be placed just below the action with the thought you are right about direction and wrong about timing and you need to allow for price to further work itself in your direction or do you recommend the stop be placed well away from the action to allow for price probing those "retail" stop placement areas?

Thank you for your answer and willingness to help.

I don't trade bar to bar, and although I keep candle charts, I pay very little attention to what kind of bar is formed, with the exception of bars with extremely long tails. These bars can be important points of support or resistance. Instead I concentrate on price levels. If I am pressing and adding, it is likely to be on a trend day, in the direction of the trend. If I have just initiated a long on a dip (in an up-trending market), is it at or near a level where I could expect the value longs to step in and support the market, have the bears been trapped, or is it just a cyclical low? My assessment of these variables will determine how aggressive I will be with my adding. My adds are also predicated on volatility, i.e., ATR and ADR. If the average daily range is is 11.00, I am not looking to capture a 12.00 point move, rather than a 5 or 6 point move, depending on time-of-day, and even the day-of-the-week. There's other input I consider which I constantly monitor in real-time as I watch price action, e.g., the dollar, bonds, $TICK, p/c ratio, VWAP, profile, delta, breadth, sentiment, pivots. As far as the mechanics of adding, I'll add on dips mostly (timed with the $TICK) and save breakouts for putting out "highballs". I may or may not pyramid my size when adding, but that is essentially based on feel. There is no real way of knowing how far a move will carry, and sometimes the trades with the lowest probability of working are the one that are the biggest winners, so I almost always scale out of these kind of trades. Additionally, I always try to place my stops, a) where other don't place theirs b) where I no longer want to be in the position and 3) within the parameters of my risk management strategy.

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  #1128 (permalink)
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tigertrader View Post
I don't trade bar to bar, and although I keep candle charts, I pay very little attention to what kind of bar is formed, with the exception of bars with extremely long tails. These bars can be important points of support or resistance. Instead I concentrate on price levels. If I am pressing and adding, it is likely to be on a trend day, in the direction of the trend. If I have just initiated a long on a dip (in an up-trending market), is it at or near a level where I could expect the value longs to step in and support the market, have the bears been trapped, or is it just a cyclical low? My assessment of these variables will determine how aggressive I will be with my adding. My adds are also predicated on volatility, i.e., ATR and ADR. If the average daily range is is 11.00, I am not looking to capture a 12.00 point move, rather than a 5 or 6 point move, depending on time-of-day, and even the day-of-the-week. There's other input I consider which I constantly monitor in real-time as I watch price action, e.g., the dollar, bonds, $TICK, p/c ratio, VWAP, profile, delta, breadth, sentiment, pivots. As far as the mechanics of adding, I'll add on dips mostly (timed with the $TICK) and save breakouts for putting out "highballs". I may or may not pyramid my size when adding, but that is essentially based on feel. There is no real way of knowing how far a move will carry, and sometimes the trades with the lowest probability of working are the one that are the biggest winners, so I almost always scale out of these kind of trades. Additionally, I always try to place my stops, a) where other don't place theirs b) where I no longer want to be in the position and 3) within the parameters of my risk management strategy.

Ok, makes sense.
Currently CL has an ADR of around 250 ticks. I'm guessing since my charts aren't open. When I get up and see an overnight range of 100 tick and price is currently half way between the high and low and I believe the market is long, then a potential target zone might be the ADR less 50+\- ticks to allow for the 50 ticks price is off the low. This would workout to +/- 140-170 ticks as a potential target zone. This may be a simplistic explanation but have I captured the essence of the idea?

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #1129 (permalink)
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Nov crude's ADR(20) =$1.64 and an ADR(10)= $1.78 and it's ATR 15 is running around .20 cents. Irrespective of other inputs, this puts your trades in some kind of perspective. If you were to risk 1.5X ATR you would risk app. .30 cents, if need be .40 cents and maybe a decrease in size. The odds of buying the low of the day and selling the high (capturing the range) are pretty low, so if you were to capture 70% of the range, that would be app. a $1.20 which would be a 1:4 risk/reward and a reasonable target for the trade( not taking into account price levels/S&R).

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  #1130 (permalink)
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tigertrader View Post
Nov crude's ADR(20) =$1.64 and an ADR(10)= $1.78 and it's ATR 15 is running around .20 cents. Irrespective of other inputs, this puts your trades in some kind of perspective. If you were to risk 1.5X ATR you would risk app. .30 cents, if need be .40 cents and maybe a decrease in size. The odds of buying the low of the day and selling the high (capturing the range) are pretty low, so if you were to capture 70% of the range, that would be app. a $1.20 which would be a 1:4 risk/reward and a reasonable target for the trade( not taking into account price levels/S&R).

This approach to trading seems to require the trader have some sort of opinion about the daily direction and be prepared to trade in that direction only as opposed to being both long and short throughout the day as well as potentially having only a single trade while adding and subtracting to it throughout the day.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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