mercredi 28 septembre 2016

A great way to trade crude oil on WEDNESDAYS

Inventory data will be released at 20:00 on every Wednesday. I have been observing how it behaves during that time. I found out certain patterns. I traded during those times and 60% of the time I was right.

1) Don't trade until the 5 min candle is formed ie., wait till 20:05: Most of my mistakes revolve around this simple thing. A lot of the times you will notice that the candle breaks down to one side and then reverses.

Don't get caught in this whipsaw. If you're lucky and traded the right side you will make a huge profit but if you're caught on the wrong side then you will loose a lot. So, why take that risk:thumb:?

2) Understand the length of the body and tail: After the 5 min candle is formed, look at the length of its body and tail.

If it breaks down to one direction and closes on the other side, then don't trade for 5 more minutes. The main reason is this- large hedge funds are struggling to decide the direction based on the data. If they're struggling, then why do you want to struggle and trade:rofl:? So, wait. Never trade if the candle breaks up on one side and closes on the other. It's a recipe for disaster.


If it breaks down to one direction and closes on the same side with a small tail, then wait for a minute(the price will rebound a bit from the drop/rise). Then follow the candle's trend with a large stoploss. Most probably it will resume the direction soon enough.

If it has a small body but a large tail (on the same side) then drop a trade as soon as possible in the same direction. Keep in mind that you must look for the first sign of reversal to get out. The reason is simple- small body + large tail indicates price struggle.

3)Don't look at the data: Data released is useless because it is already discounted in the market. You think you can beat that $50M supercomputer's fundamental analysis of that data? Good luck.:D

4) Always wait for the candles to close: At that time a lot of candles will have huge tails on both sides. So, don't make a decision to close your trade until the candle closes because there might be a possibility of continuation of the trend. (I made this mistake a lot of times)

5) Don't trade from 6:30pm - 8:00: It's the time when some of the large funds close their positions before the data is released. So, Oil will act choppy and irrational during those times. Even if you find a nice pattern, I don't recommend trading at that time because you will carry extra risk.

Hope this helps. I made (and lost) a lot during that time so I know that I am talking about it from my observations and mistakes. Keep in mind that this is not a 100% fool-proof strategy or something like that. These are just my observations. Any useful knowledge or critical analysis of my ideas are appreciated.


A great way to trade crude oil on WEDNESDAYS

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