AMA? Oil trader.

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>oil

>>1578751
How long have you been trading?

>>1578752

It's okay, a lot of people cant handle the volatility.

>>1578764

A year, not a super long time, but I've been paying all of my bills with it for six months now.

>>1578751
Why trade the ETF instead of CL?

Should I buy or sell

>>1578751
>Picture shows resistance levels, they're what pro traders use over diagonal trend lines and I find they are more useful 90% of the time because people are looking for price targets, not diagonal trend lines.
This.
I dont know very much but this is one thing that seems to be the truth: The institutions dont care about your diagonal lines. They work orders at specific and precise price levels.

>>1578776

I just started out with using UWTI/DWTI a long time ago because of the leverage. No particular reason, I've been looking into futures. Banks use futures in particular, I'm told.

>>1578778

Yesterday new futures contracts expired, so that means banks cant buy in anymore until the next months contracts are out, that's why you see a big downturn the past day even though the EIA inventory report was very bullish. In general they will have to take profit on those contracts for the next day or two until new contracts are available to buy.

Medium term, it depends on if opec gets it's shit together in December, we could see a big downturn if they don't, but remember Saudi only has enough money for 3-4 more years at this price so they really need the supply cut to happen.

Oil should stabilize by next year, many hope.

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>>1578785
One advantage to future is platforms that support studying the volume and the orderflow.
And I'm told that Jigsaw has the best DOM.

>>1578782

The industry standard is keeping profit to loss at 3:1 ratio. As traders buy in they will take profit to reduce their risk, that's why you so often see just as it's about to break out of a resistance level, like a 100 dollar mark or a fifty cent (halfway through a dollar) mark, it wont. Generally I'm told that if you don't see a spike in volume, like double volume when it meets resistance it wont break through because people will look to actually take their money and then re-asses and buy at a retrace.

I see so many people buy because it looks like it's going to go to the moon and sell in the opposite case just before it reverses.

There should be a good tutorial somewhere on how to find these levels, draw them as lines on your chart. I draw diagonals too from extremes (connect very highs and lows) just to indicate if we're still in trend longer term. I think that works better with equities.

>>1578794

I have been told by some of the guys I talk to who write Algos that they can never chart properly using spot price, but only futures charts.

The order flow on that is interesting, I sometimes use volume/price profiles, but I have found they usually just correspond with resistance/support levels that I've eyeballed.

>>1578795
> industry standard is keeping profit to loss at 3:1 ratio. As traders buy in they will take profit to reduce their risk
Aren't there two sides to industry. In futures there is the COT report that shows two diametrically opposed large speculators vs the commercials whenever the large speculators are net long the commercials are net short and visa versa.
>if you don't see a spike in volume...
I dont know if there are any platforms like this in the equities/ETF space, but In futures you can actually drill down into finer detail and see the volume that is hitting the bid and the volume at the ask which helps you determine if there are market orders on either the bid or ask. I'm still new to this and a student of the market so I dont know if there really is value to it, but there are a lot of people around the web that swear by this.

> tutorial somewhere on how to find these levels
Ive read a lot of different sources on this and many of them are uniquely different from eachother Im not sure which ones are are fact and which ones are fiction.

>>1578795

Sorry I'll clarify the 3:1 thing. Traders will have a plan of what price they think something is worth before they go in so if it's trading at 70$ and they target 100$ they will scale into a buy from 70-maybe 85 (the scaling changes a lot) and then we willing to accept a stop loss at 60$ max. So there's less emotion if you make a plan before.

They can scale out too, sometimes take like 1/4 profit 98 and so on. So really they aren't looking at that diagonal trend as much, unless it takes too long to reach target and they bail.

>>1578812

Volume is very important. It is more helpful to see the volume on specific bids because sometimes you can identify a "big buyer" who is quietly loading up at a specific price, but you have to be watching it intensely to notice that sort of thing.

There's a rule called the wash tax rule or something that says if you sell something at a loss you can't buy it back for a month or else the loss is not tax deductible, so instead of closing a bad long position because of a short term event, banks will remain long, but open up new shorts for a short period of time to "hedge' their longs so they can maximize taxes.

That's why it's important to look at managed money net positions.

Commercials in oil generally get fucked honestly, banks can move markets more than them if there's not an event.

In the realm of support resistance, it's not rocket science, just draw lines at places where it looked like it peaked, or bottom, or traded sideways for a while and if your trade seems to be bouncing off of that line then you can re asses if you want to sell.

The guy who taught me said that if a stock is trading between 50-100 and it breaks 100 on good volume then you take the previous range and stack it on top, so you would stay long with a target of 150... eventually. Otherwise, it would be plausible that the stock could trade back down to 50$ eventually, but normally the ranges aren't that big.

>>1578815
>Sorry I'll clarify the 3:1 thing....
Which traders? In futures the COT report lists three types the commercials(I assume this is companies that use physical oil and use futures contracts to hedge), the large speculators(I assume this is hedge funds or maybe banks), and the small speculators(I assume that would be retail people like me who don't know what's going on).
So I assume that the commercials dont have a risk:reward because they are hedging against the trend.

>>1578827

The speculators. This goes for equities longer term traders as well. The industry standard is typically 3:1 at places like Goldman/Schwab etc.

Oil is the future, Coal is on the way out!

>>1578815
>so if it's trading at 70$ and they target 100$ they will scale into a buy from 70-maybe 85
Is this how the commercials or the large speculators really do it? I was learning from one source that they do the opposite that they will buy on a bearish candle and sell on a bullish candle. Is this not correct?

>>1578833

It depends, if someone went in 1/4 at 70 then they could re asses and buy at 65 and 60, but it depends on the trader, some people say don't add to losing positions. If you're very sure about an earnings report or something because you're a bank and your analyst did the math then buying at a lower price would be a blessing. Sometimes in that case you would see the bank buy everything so that it couldn't go under 60 and force a reversal. Go look at gold when it hit 1240 for example.

Saying that they buy on red and sell on green sounds like a weird generalization that somebody made.

The said that you never catch a falling knife, so he would always wait for a few green candles, could be days, to be sure that it had hit bottom around the area he wanted.

>>1578822
>to see the volume on specific bids because sometimes you can identify a "big buyer" who is quietly loading up at a specific price, but you have to be watching it intensely to notice that sort of thing.
I've watched a lot of people on youtube demonstrating this where they watch this and show how when you can see evidence of a buyer or seller. I m still trying to learn it though so I dont know much about it.
Different people have different names for it but usually call it the orderbook aka Level II aka price ladder aka DOM and Ive heard a lot of people swear by that Jigsaw is the best because most platforms only have a column for total volume traded but Jigsaw has extra columns for the volume traded since the last tick which helps if you dont have as good of short term memory to remember the difference.
And some futures platforms has a graphic representation of volume traded at the bid and ask like that pic I posted earlier.

>look at managed money net positions.
is that a different name for the same thing as the Commitment of Traders report to the CFTC or is that something different?

>>1578822
>it breaks 100 on good volume then you take the previous range and stack it on top, so you would stay long with a target of 150
I've heard a lot of people describe something like this and refer to it as a measured move.

>>1578839
>because you're a bank and your analyst did the math then buying at a lower price would be a blessing. Sometimes in that case you would see the bank buy everything so that it couldn't go under 60 and force a reversal.
The guy I was referring to spends a lot of time talking about how the banks are the ones who move the price and that the only way the will get the liquidity they need is to work buy orders during down candles and work sell orders on up candles (they use limit orders so price comes to them to get their better fills). His reasoning is that the only way they can get their orders filled they will entire other peple to provide the liquidity they need by basically manipulate price like for example if they want to accumulate they need a lot of people to want to sell so they will manipulate price into a pocket of sell stops or if they where want to distribute they will manipulate price into an area of buy stops.

>>1578851

I'm not sure if it's called something commitment, I just see it posted on twitter every friday under the term Managed money short/long/net as a graph.

Go check out the #OOTT on twitter, they post a ton of really helpful stuff and will have this.

If you're pretty interested in just oil there are events you NEEED to know.

Monday 10:00 EST is a report called Genscape, it estimates what the EIA (US oil inventory) will be on Wednesday, it's usually pretty accurate, but isn't available to the public for 5 minutes. However, it will show sentiment before you see the numbers, that's why you see the bottom of the last uptrend to be at 10:00 on monday.

Tuesday 4:30 PM EST (after market) is the API report, it's like genscape, you can't see it unless you pay for it, but people will post on twitter in about 10 minutes for free, like genscape. It includes Gasoline/Diesel inventories, genscape just includes oil.

API can be hugely wrong though, sometimes.

Wednesday 10:30 am is the government's report on how much oil we have. It's hugely volatile, people will normally have made bets from Monday all the way to this moment. This is available for free on the EIA website, but hedges have algos to read it super fast and trade on it so unless you have a good idea of what it's going to say its scary.

Friday 1pm EST they report how many rigs have been created in the past week. Not a huge deal, but it's good to know for long term, you could see a twenty cent swing in either direction.

If you don't know these events oil seems to be totally random.

It's probably called a measured move.

>>1578863

That is in many ways how it works, I see the liquidity problem happen most at their final target because they're trying to sell it all at 100 instead of little bits. That's why if you don't see big volume it's likely they're unloading quietly.

I also forgot to mention that in oil the market times for big money players are 9:00 am to 2:30 Pm EST. Not typical market hours.

Contract buying expires at 2:28 so often you will see non contract buyers take profit from 2:28 to 2:30 and that I have seen swing sixty cents in either direction in thirty seconds.

>>1578863
>The guy I was referring to spends a lot of time talking about how the banks are the ones who move the price and that the only way the will get the liquidity they need is to work buy orders during down candles and work sell orders on up candles (they use limit orders so price comes to them to get their better fills). His reasoning is that the only way they can get their orders filled they will entire other peple to provide the liquidity they need by basically manipulate price like for example if they want to accumulate they need a lot of people to want to sell so they will manipulate price into a pocket of sell stops or if they where want to distribute they will manipulate price into an area of buy stops.

Oh! They hunt for squeezes all the time too! They assume a bunch of retail people will put their stop losses at something stupid like 60$ so they will drop it to 59.90$ to cause a squeeze down to 59.80 and use that instant to buy it up.

I always assumed they did that to get a better price, could be they were looking for liquidity. That's a useful insight.

>>1578865
This is probably the same thing.
https://en.wikipedia.org/wiki/Commitments_of_Traders
The Commitments of Traders is a report issued by the Commodity Futures Trading Commission enumerating the holdings of participants in various futures market
(CFTC) releases a new report every Friday at 3:30 Eastern Time, and the report reflects the commitments of traders on the prior Tuesday.

Not sure if I am or am not interested in just oil. Right now I'm just learning. Sofar Ive spent more time learning from the foreign exchange futures though and even a little bit of time trying to figure out treasury futures.
And this is the economics events calendar I've been refering to http://www.forexfactory.com/calendar.php

>you see the bottom of the last uptren
>If you don't know these events oil seems to be totally random.
This is the same way in the currency futures they'll put in a swing low or high right before the reports come out. Ive played with studying chart history by drawing vertical lines on dates reports came out and it looks to me like with the vertical lines it makes price seem a lot less random.

>>1578877

Most of the Forex exchanges in the world happen in London so it's important if you're using US hours to note when they close and open because you will see if it's been a big profit day they will sell some to reduce risk over night, seeing as forex is traded 24/7. So if GBP.USD hits a major resistance point a half hour before London close it's likely to not go above that point. It may re test at US close, or slightly lower.

If you are smart and research the fundamentals you will come to a conclusion and everything else will probably start to seem like in between noise. Anyways, good luck. I'm out.

>>1578872
You also mentioned earlier
>>1578822
>instead of closing a bad long position because of a short term event, banks will remain long, but open up new shorts for a short period of time to "hedge'
That guy also talks about this the position they use to manipulate price they will have to hold onto that position that is underwater and once they filled their main position they wanted they will manipulate prices back to where they can exit those positions that where underwater and then price will continue in the direction they expected based on their research and fundamental analysis.

>>1578886
No no. we're talking about futures. Foreign exchange futures that are traded on the CME in Chicago contract symbols are E6, J6, B6, A6, C6, M6, N6, S6.
http://www.cmegroup.com/trading/fx/#majors

>>1578751

How much money are you making?

>>1578886
>if GBP.USD hits a major resistance point a half hour before London close it's likely to not go above that point
The person I've been studying from says stuff like this such as the average daily range is usually fulfilled from London open to London close, and I think this is true based on my own observations.

In fact is pretty cool to hear from a pro trader so many confirmations because there are a lot, a huge number, of people who say that this mentor is a scammer and doeesn't know what he is talking about.

>>1578895
Looks like OP gone, unfortunately.
>>1578886
>Anyways, good luck. I'm out.