2 Live Crude Oil Futures Day Trades from our Live Trade Room, OPEX Trading, Speed, Momentum, Double-Tops & Double-Bottoms

What a great day in the live trade room today! We made some great profits day trading, and then we took some questions about some of the most important aspects of our trading.

We trade live in our trade room every day, and you can see 2 live trades on Crude Oil Futures!

Do you know how to trade options expiration? Do you really know how to trade it?

How about momentum? Do you know how we use it, and how it may not be used correctly in your trading?

Don’t forget about speed…this is another very important aspect, and we covered lots more topics in today’s video.

 
Questions:

– OPEX Week & Wacky Wednesday

o Options expire the 3rd Saturday of every month
o The last trading day is on Friday, so we call it OPEX Friday
o When options expire, the traders managing these options need to start working on them BEFORE Friday, so they begin on Wednesday
o Wacky Wednesday is the wed before OPEX Friday, and its characterized by LARGE blocks of unexpected volume without any real reason for it.

– Speed of the Market

o SPEED article on the blog, search for it under the search box

– Momentum (overbought/oversold)(divergence)

o Very simple to understand how it works, but can be more difficult to implement because of the overbought or oversold territory

 Long = curling up from the bottom & avoid overbought
 Short = curing over from the top, and avoid oversold
 I will use 2 timeframes for momentum on slow and choppy days

• If I look for a trade on a 1-min chart, I will also look for additional confirmation on a 3-min chart, or 5-min chart
• 4-range charts, and look for the 13-range momentum as well
• Do not wait for that additional confirmation during trending markets

– Best-Case & Worse-Case Scenario

o Best-Case = best price I could possibly get for my entry
o Worst-case = the price level that I will use, but nothing above/below that
o For example: Breaker Long @ 77.50

 Best case = 77.51 (1 ticks away)
 Worst case = 77.57 (7 ticks away)

– Double-tops and bottoms

o Check the blog for a bunch of great videos on this topic

– Why does low volume often produce large moves in the market?

o Why does the ES have a hard time moving

 Because there are so many people providing support and resistance that the market simply cannot get going.

 The ES E-mini is TOO high volume, so it doesn’t move as much

• Eurostoxx and the T-Notes are very similar

o The same reason we like trading crude oil

 You get large, low volume moves because there simply isn’t anyone standing in the way

– What are the characteristics of low volume?

o Double-tops and bottoms
o Price will travel in big chunks without any real reason
o We see trend lines tested but difficult to identify when they will break
o We see big round numbers act like magnets
o Open the door for market manipulation

– Why don’t we use the 200ema and the 50ema?

o Maybe we should.
o I don’t trust calculation, bottom line!
o I like price levels, not fancy calculations

 Market profile
 Pivot points
 Fibonacci levels
 What do we use?

• Auto-levels indicator identifies price levels
• You own it as a member, along with the pace of tape indicator and many others.

– Hedging Tool?

o The futures markets we trade TODAY are older than the equity markets here in the US
o Futures began with farmers in Scotland trying to protect themselves against falling prices

 You have 100 cattle in field, and you’re afraid that the cost of cattle will DROP before you can sell them as fully-grown cattle

 Sell Cattle futures

• Fast fwd 6 weeks
• Prices increase

o I lose money on futures hedge
o I make money by selling my cattle for more than I expected
o I own a gas station

 My concern is the prices will RISE
 Buy crude oil futures
 Fast forward to 2 weeks, prices dropped
 I make more money selling gas at my gas stations
 And I lose money on my futures position.
 In the end I break even. (hedge)

Trend Lines:

– Trend lines are always going to very inconsistent, which is why we mark them, and we AVOID them.

o Low volume days make for a very frustrating experience with trend lines

 Sometimes they hold 99 times, and then the 100th time is when it breaks on ZERO volume, so we never know!
 Same is true for double-tops and bottoms

o 2 different types of trend lines

 Slow chart = these are VERY powerful and we must avoid them
 Fast chart = these are just to give us our location on the chart

• Trend lines gives us a lot more information on WHERE we are on the chart, and we CAN trade around them

• Fast trend lines are LESS powerful then the slow chart uses.