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Big Mike's CL (crude oil) journal


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Big Mike's CL (crude oil) journal

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  #1 (permalink)
 Big Mike 
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Here is a video blog about trading CL. I also share my usual opinions on multiple time frames and indicators/simplicity, money management, etc.

Play the VLC media player if you have any issues after unzipping, just like all my videos in the Downloads section.

I'll try to keep this journal updated with CL thoughts and trades.

Small chart: 89 volume
Medium chart: 6 range
Large chart: 12 range

I've attached a screen shot but the main point of this post is in the video not the screen shot.

Mike


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 HJay 
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I'm downloading it now... It's a beast.. Thanks for posting Mike...

UPDATE: Just viewed it,.. Nice Setup Mike!!... Appreciate all the words of wizdom as well.

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 Big Mike 
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HJay View Post
I'm downloading it now... It's a beast.. Thanks for posting Mike...

Hi HJay,

I hope you enjoy it and it helps make you some money.

Mike

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 Big Mike 
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The low-res instant-play Viddler version is now on my blog:
Big Mike's Trading Blog: Trading CL (crude oil futures) plus my usual opinions

Mike

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 Big Mike 
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In the video, I talk about my new multiple time frame (MTF) replacement for EOT's Allas Average. I also show off a new MAE/MFE indicator I wrote, and a Bollinger Divergence indicator and trade setup.

I think you'll see my setup here is extremely simple and straight forward. Simplicity is almost always better. Less is more when it comes to trading.

A few things:
a) The MTF indicator is not available for free download. I spent a great deal of time on this, mainly because NinjaTrader 6.5 has a HUGE bug when it comes to multiple time frames.... and I had to work around it. You can get the "free" alternative by just loading multiple charts and visualizing it.

b) The TrendBars paintbars are in the VIP section.

c) The Bollinger Bands are from BWT. I wrote the divergence stuff to supplement my Blue Wave Trading indicators I purchased a long time ago. If you own BWT and want some help implementing their indicators into strategies, I can do it for you. If you want a free version I'm sure there are several alternatives.

To better understand what you are seeing on the divergence: Blue diamond followed by blue dot in panel 2, while panel 1 is in a up trend, that means long. Magenta square followed by blue dot when in up trend means long. Blue diamond followed by red dot while in down trend means short. Magenta square followed by red dot in down trend means short.

The MTF line in panel 1 is not a "moving average" like you would normally consider one. It's just based on five different time periods (tick, range, minute, volume, and current chart) of varying sizes/lengths. It is remarkably accurate, because after all price doesn't lie and the MTF line is just showing you what price is doing in multiple time frames.

Your job is to have patience and discipline along with a trading plan that has good money management.

Mike

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 RodS 
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Thanks Mike!

As always you provide all with some very valuable information! I applaud your continued help and efforts in making this a "one of a kind" trading community!!


Thanks
Rod

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 jdella 
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Thanks mike, I really enjoyed that video. The part I liked the most was the money management part, although I did like your simple setup. The money management is the part that I struggle with the most. I always have a fixed profit target and yet my stops always seem to be 2 to 3 times greater than my profit target. I have a win ratio most times in the 70-80 % area, but where I get killed is when I do get stopped out, my losers wipe out the gains that I have. I was impressed with the fact that you said that you have a 4 times greater profit target than your stop. You don't have to have a high win ratio to still make money, but how do you do that? Like for example you trade the CL, that thing is furious. You could be right about your trade and still get stopped out with a 10-15 tic loser in a wiggle, and then have it go your way. How do you achieve the high reward to risk ratio and yet still give a market the room it needs to breathe? I am interested in hearing your response as well as any others.

BTW, the main market that I focus on is the EC and I try and shoot for a 5 tic profit, but it's hard to try and have a stop any less than 10 tics, which bugs me, but you will almost always get clipped with even a 5 tic stop.

Thanks in advance for any words of wisdom on this subject.

Jeff

 
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 Riverend 
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Thanks mike,
I can see where your new MAE/ MFE indicator would be a nice addition to my trading.
Thanks again for your help in trying to make everyone a better trader.

Vic

 
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 Big Mike 
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jdella View Post
Thanks mike, I really enjoyed that video. The part I liked the most was the money management part, although I did like your simple setup. The money management is the part that I struggle with the most. I always have a fixed profit target and yet my stops always seem to be 2 to 3 times greater than my profit target. I have a win ratio most times in the 70-80 % area, but where I get killed is when I do get stopped out, my losers wipe out the gains that I have. I was impressed with the fact that you said that you have a 4 times greater profit target than your stop. You don't have to have a high win ratio to still make money, but how do you do that? Like for example you trade the CL, that thing is furious. You could be right about your trade and still get stopped out with a 10-15 tic loser in a wiggle, and then have it go your way. How do you achieve the high reward to risk ratio and yet still give a market the room it needs to breathe? I am interested in hearing your response as well as any others.

BTW, the main market that I focus on is the EC and I try and shoot for a 5 tic profit, but it's hard to try and have a stop any less than 10 tics, which bugs me, but you will almost always get clipped with even a 5 tic stop.

Thanks in advance for any words of wisdom on this subject.

Jeff

Hi Jeff,

There is no doubt that you can be "right" and still get stopped, meaning that it comes back enough to take you out of the trade, then continues on and moves in the direction you originally anticipated.

However, I've found that more times than not when this happens to me it is because of a mistake I made. For example, I was too concerned about missing a trade and I entered when I really shouldn't have. Quicker, faster, more is almost always NOT better when it comes to trading. Patience is better. Your mind thinks you have to jump immediately at close of bar into a new position or you'll miss it, but in reality, it's those trades that meander for 4-5 bars and might shake you out when in the end the bar before it blasts off produces the correct entry signal you should have been waiting for.

Having targets greater than stops is an absolute requirement. But you also need to make sure you are actually ending the day with a win/loss dollar ratio greater than 1. In ninjatrader this is called something like "Ratio avg. winner to avg. loser". I am not talking about win percentage, but how much money your winners made vs your losers. Having a target twice as big as your stop, but manually exiting every trade before your target is hit, well that isn't going to help. We often have explosive moves because many traders were caught on the wrong side of the trade, and then it "pops" and it can easily run for a bit. I promise you it is entirely possible to have a 2:1 win/loss dollar ratio while still having near 50% win rate. It's not easy and takes a lot of experience.

You must give it enough room to breathe -- I think on CL that means between and 8 and 12 tick stop if your target is 16 ticks to 20 ticks. You can't have a 6 tick target and 3 tick stop and expect to win, because the market is not the precise, you will get stopped too often. It's also important to not cap your winners. Once you can trade more than one contract, keep a runner contract on until a clear signal develops telling you to exit the trade. Sure maybe half the trades you'll get stopped breakeven on the runner but the ones that do run can make your daily goal in one single trade, and you can then stop trading.

Last, the MTF tool I am using is quite important. It is crucial to know what side of the market you should be looking at. You've got to know before you take each trade if the market is in an upward or downward push, so you can cherry pick only the best trade setups before they happen.

Mike

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  #10 (permalink)
 Big Mike 
Site Administrator
Swing Trader
Data Scientist & DevOps
Manta, Ecuador
 
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
 
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Posts: 50,131 since Jun 2009
Thanks: 32,602 given, 98,790 received



Riverend View Post
Thanks mike,
I can see where your new MAE/ MFE indicator would be a nice addition to my trading.
Thanks again for your help in trying to make everyone a better trader.

Vic

Hi Vic,

I have really found them incredible useful. I've built them around several triggers and have one for each, so it can really help visualize the stepping of the market and also help you quickly determine some better stops and targets.

Due to the complexity of the indicator however I have chosen to not give it away for free at this time. If you want one, we'll need to custom build it around your own trigger, you can talk to me in the Custom Programming forum if you want.

Mike

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