Breaking my rule if Oil drops to $15p/b

new_trader said:
Most likely it's the spot price which would be the most actively traded contract month, usually the one nearest expiry. Your quotes should be close to the the contract with the highest volume (NB: CME Prices are delayed by ~10min)
Click to expand...

This would explain why I didnt see the lows that others saw then?
Because it's spot?
 
darktone said:
Youve got an opportunity to learn something here Nowler.
Work out your trade size vs acc balance, how leveraged are you?
If youre not too hot (2x max id prefer 1x) you can trade around the position to improve your average. If youre hot get smaller and treat this as max position size and stick to it.

First accept your risk, where are you at wti at 0? Accept that!
Decide on a max/min position size and stick to it, you can trade say 30-50% of it. ie if the market takes off in your favour your worst case is being half size.
Aim ascending orders at value, ie youre long 100 units. You decided to trade 50 max. Aim to trade the volatility favourably, orders could be.
sell:-
[email protected]
14@14
[email protected]
if you get filled
buy:-
[email protected]
14@12
[email protected]

Repeat!

Keep a note of pnl as you execute. Youll have your ave position and BE point, your aim in this scenario is to improve youre BE point and be full size for the move.
Click to expand...


Hey mate.
I'm definitely up for learning something!

I am fine with price going to zero (my account should be able to handle it - and it's only a micro account anyway, so i'll still have a shirt on my back if it did happen to go tits up).

With my current sizing, if price went to 0 it would mean 70% of my account.
 
0.7x is great, honestly I thought youd be a lot bigger as most are. It allows you to relax.
I think I read earlier you said you get twitchy. Deep breath, perhaps if you start thinking in terms of yardage rather than £ it might help. It doesnt really matter what you do, identify what sparks you up and deal with it as best you can, as long as it works for you its all good.
The number one aim is doing yourself a favour. It doesnt matter about booking a loss or being right/wrong. Its simple as "im in this position, if I can sell some @14 and buy it back @12", youve done yourself a favour.
Repeat repeat.
When youve got this down the market will look a lot different and the window of opportunity will be a lot wider. 👍
 
darktone said:
0.7x is great, honestly I thought youd be a lot bigger as most are. It allows you to relax.
I think I read earlier you said you get twitchy. Deep breath, perhaps if you start thinking in terms of yardage rather than £ it might help. It doesnt really matter what you do, identify what sparks you up and deal with it as best you can, as long as it works for you its all good.
The number one aim is doing yourself a favour. It doesnt matter about booking a loss or being right/wrong. Its simple as "im in this position, if I can sell some @14 and buy it back @12", youve done yourself a favour.
Repeat repeat.
When youve got this down the market will look a lot different and the window of opportunity will be a lot wider. 👍
Click to expand...

That was a typo.
I hit 7 instead of 8, but yeah, 0.8x is a comfortable place to be.

When I said twitchy, I wasn't exactly referring to nervousness at losing money.
I'm fine with losing the amount that I have accepted at worst case scenario.
I was more referring to watching price to eagerly on too short of a time frame... Making snap decisions is not good for me 🙂 I am not a quick thinker. I am deep thinker... I need time to think things through...to reflect.

When I said that, I had a recent trade in mind where I was watching it on a very low TF for some reason. Oil had dropped substantially but not near my entry order. I was getting all "twitchy" thinking should I just buy at this price, then it retraced a bit, then came back down near the low and I started to lose composure and was susceptible to making rash decisions, rather than well thought out ones.

That's not to say I need hours to think things through 🙂

I will have a look at implementing what you are saying. Clearly it's quite a beneficial skill to have but at the moment I dont know where oil is going to go in the immediate term. I know it's going to head for $40 eventually, but beyond that, I admit I simply don't know. I am willing to play the long game.

Out of interest, are you (or any of you) able to place stops in the minus range?
 
Also, thanks for the help.
I always appreciate someone taking time to help me. And critiquing
 
Nowler said:
That was a typo.
I hit 7 instead of 8, but yeah, 0.8x is a comfortable place to be.

When I said twitchy, I wasn't exactly referring to nervousness at losing money.
I'm fine with losing the amount that I have accepted at worst case scenario.
I was more referring to watching price to eagerly on too short of a time frame... Making snap decisions is not good for me 🙂 I am not a quick thinker. I am deep thinker... I need time to think things through...to reflect.

When I said that, I had a recent trade in mind where I was watching it on a very low TF for some reason. Oil had dropped substantially but not near my entry order. I was getting all "twitchy" thinking should I just buy at this price, then it retraced a bit, then came back down near the low and I started to lose composure and was susceptible to making rash decisions, rather than well thought out ones.

That's not to say I need hours to think things through 🙂

I will have a look at implementing what you are saying. Clearly it's quite a beneficial skill to have but at the moment I dont know where oil is going to go in the immediate term. I know it's going to head for $40 eventually, but beyond that, I admit I simply don't know. I am willing to play the long game.

Out of interest, are you (or any of you) able to place stops in the minus range?
Click to expand...
So theres lots here that tell you something about yourself. Work on the bits that cause you problems.
"I admit I simply don't know" Thats a good one, dont mess with that 😉
Youre trading spot, 0 is bottom, if it ever got there we likely got much bigger problems than oil to concern ourselves with.
 
Big_P said:
Thanks for the answer New Trader, but I'm not sure I completely follow.

If I bought an ETF based on either WTI or Brent spot , then I would still incur a rollover cost ?

I would understand there being an admin fee of some description, but given there is no expiry to a spot price, where does the rollover occur?
Click to expand...

You need to read the Product Disclosure Statement (PDS) to find out the structure of the ETF. If it is entirely constructed of holding futures contracts then the price of the ETF will be very close to the front month of the futures contract. Since the ETF is unlikely to take delivery of the oil, they will rollover their contracts near expiry and pay the difference between the front month and the next month.

Right now the front month (Jun2020) is $15.42 and next month is (Jul2020) is $22.48 wich is a premium of $7.06. However if near expiry the premium widens then the cost to rollover is even higher.
 
new_trader said:
You need to read the Product Disclosure Statement (PDS) to find out the structure of the ETF. If it is entirely constructed of holding futures contracts then the price of the ETF will be very close to the front month of the futures contract. Since the ETF is unlikely to take delivery of the oil, they will rollover their contracts near expiry and pay the difference between the front month and the next month.

Right now the front month (Jun2020) is $15.42 and next month is (Jul2020) is $22.48 wich is a premium of $7.06. However if near expiry the premium widens then the cost to rollover is even higher.
Click to expand...

Ah , that makes a lot of sense. I get it now.

Thank you very much!
 
Nowler said:
This would explain why I didnt see the lows that others saw then?
Because it's spot?
Click to expand...

Find out from your privider, this is what IG has posted:
Spot (or undated) contracts
IG’s spot market pricing is based on the two most liquid front month futures contracts available at the present time.
This means that there are three different scenarios:


  1. If both futures contracts used to price the spot contract remain positive, then the IG price will remain positive
  2. If both futures contracts used to price the spot contract are negative, then the IG price will become negative
  3. If one of the futures contracts is negative and one is positive (a more likely scenario than both futures being negative), the IG price could be either positive or negative depending on where our spot price is along the futures curve between two contracts. This could also occur if one of the futures contracts (most likely the front month) had an incredibly low price
 
new_trader said:
Find out from your privider, this is what IG has posted:
Spot (or undated) contracts
IG’s spot market pricing is based on the two most liquid front month futures contracts available at the present time.
This means that there are three different scenarios:


  1. If both futures contracts used to price the spot contract remain positive, then the IG price will remain positive
  2. If both futures contracts used to price the spot contract are negative, then the IG price will become negative
  3. If one of the futures contracts is negative and one is positive (a more likely scenario than both futures being negative), the IG price could be either positive or negative depending on where our spot price is along the futures curve between two contracts. This could also occur if one of the futures contracts (most likely the front month) had an incredibly low price
Click to expand...

I will have to ask them explicitly because I have searched for this on their site and found nothing.
 
1587676858657.png



This is what my broker gave me when I asked.
I asked them what contract/s they use and they said they have very recently rolled from the June to the July contract...? Is that a thing? Isn't the June contract still active?

They are sending me some links to info after I asked for more detail on the rolling of one into another contract, and how this affects me if I am holding a position.

EDIT: Note the line where if price approaches $0.01 🙂
Tut tut. do these market makers not want me to make money?? lol
 
@Nowler I decided to take a "safer" risky route and opened a tiny position in this ETF, as far as I can tell it is a Physical ETF 👍

iShares U.S. Oil & Gas Exploration & Production ETF | IEO

The iShares U.S. Oil & Gas Exploration & Production ETF seeks to track the investment results of an index composed of U.S. equities in the oil and gas exploration and production sector.
www.ishares.com www.ishares.com

[email protected]

Keep those bailouts coming 😄
 
new_trader said:
@Nowler I decided to take a "safer" risky route and opened a tiny position in this ETF, as far as I can tell it is a Physical ETF 👍

iShares U.S. Oil & Gas Exploration & Production ETF | IEO

The iShares U.S. Oil & Gas Exploration & Production ETF seeks to track the investment results of an index composed of U.S. equities in the oil and gas exploration and production sector.
www.ishares.com www.ishares.com

[email protected]

Keep those bailouts coming 😄
Click to expand...

What they really need to do is let the smallest of the small go out of business.
Why bail out a load of weak links?

Can't see a bailout rising the price of oil though.
The glut remains, and there is no sign of demand coming back yet.
Even if they found a load of storage, the main problem persists.

Oil is not rising until those stores deplete...
Maybe a bit of a pop when demand kicks up again, but the market will still be saturated...
 
What they need to do and what they will do are two different things. Yes, things will keep going from bad to worse until they allow the free market to determine who stays in business.
 
new_trader said:
What they need to do and what they will do are two different things. Yes, things will keep going from bad to worse until they allow the free market to determine who stays in business.
Click to expand...

Agreed!
The reason the situation is as bad as it is, is down to doing what they want rather than what is needed. The free market is the answer to that question. Cut the dead weight... stop protecting the weak companies so much.

It's important to step in at times and under certain circumstances, but bailing out all these companies is kicking the can down the road, and throwing money down the drain.
 
new_trader said:
@Nowler I decided to take a "safer" risky route and opened a tiny position in this ETF, as far as I can tell it is a Physical ETF 👍

iShares U.S. Oil & Gas Exploration & Production ETF | IEO

The iShares U.S. Oil & Gas Exploration & Production ETF seeks to track the investment results of an index composed of U.S. equities in the oil and gas exploration and production sector.
www.ishares.com www.ishares.com

[email protected]

Keep those bailouts coming 😄
Click to expand...

Stop hit @3149
 
You must log in or register to reply here.

Similar threads

J
Oil Prices Decline Amid Unexpected U.S. Inventory Build and Rate Concerns
Replies
0
Views
317
johnsonsu
J
J
Example calculation of a margin call
Replies
0
Views
1K
jaapk85
J
M
New To Trading
Replies
4
Views
1K
arigoldman
A
JTrader
The Truth about Oil
2 3
Replies
40
Views
9K
PKFFW
P
limey16
Oil trade - long term, opinions please!
2
Replies
27
Views
6K
investcdn
I
Back
Top