james_gsx

Yes, you can use futures to do this and that's the easiest way to understand. But you can still utilize a spread using options, except in this case you would formulate the strategy to create a crack spread around options to become neutral in your position. The NYMEX website has some stuff on the crack spread options. But as to why I wouldn't use regular futures, again it comes down to money. It's expensive to use enough futures to actually generate any income. Not to mention the price swings are extremely volatile. It would be easier to use options where the greeks would work in my favor and essentially be cheaper and wouldn't incur as much heat. Typically a company would use a crack spread to hedge against their oil or natural gas inventory that they had to sell on the open market. But in this case, I would adjust the spread to collect premiums, so I guess crack spread is the wrong term, but I'm still up for discussion on it.

$$$$ Not to ignore the fact that CL options are EXPENSIVE! But, at least I won't get killed and my families belongings taken due to daily price volatility :o

I say no, the worst is not yet over. A few political reasons which you may or may not disagree with. Obviously, politics is typically very opinionated. 1 - The $600 stimulas checks were not because our government loved us. But since the vast majority of GDP is from consumer spending, $600 would cause that spending to artificially inflate. We all know what the technical term of a recession is, and with the elections coming up you do the math. Neither political party wanted to announce a recession at the same time of the election, therefore the $600 would prolong that from happening. Obviously markets don't care, as you can see from the charts. 2 - If that was in fact the case, then that shows we are in a recession (theoretically) and probably won't get out for a few quarters. Markets tend to move before the actual economic pieces hit. Hence why we rally when things come in better than expected. We all understand how everything gets priced in. 3 - Notice how the first 2 times price literally crashed to 1250 then rallied back up. Now this third time, price steadily fell to the 1250 level comparatively speaking. This shows me that price was indeed "suppose" to be at that level if that makes any sense lol 4 - I think for using a long term approach and finding a bottom a daily chart is not sufficient nor is a weekly. I want to look at the monthly. A few months ago we had a nice wide range spinning top at support of 1250. Price moved below the 50sma, but buyers quickly came in and bid the price back up. We rallied to the 8 and 21 ema, where they eventually crossed over. We had an inverted hammer, which was confirmed in June. Notice the kicker, we closed BELOW the 50sma on the monthly. Last time that happened in 200 the S&P fell over 500points. Will that happen this time? Who knows, but it's something to take into account. We notice when it falls below the daily 50sma, and in this case I think it's just as important to note it fell below the 50. The major difference is the time frame, we could potentially sit around these levels for several months before moving lower and just experience a TON of volatility. 5 - I don't have a chart of the VIX and I'm too lazy to pull one up, so I'll leave that to you. Pull it up and look at where it sits now, compared to the last two times we hit the 1250 level. Major difference, it tells me that price is being accepted at this level. At the end of the day, I think this is good. I want the markets to fall further. This way we get a fresh start and can move forward. A lot of money needs to shift hands, and I don't feel that has happened sufficiently. I'm not calling for the ES to hit 8000 or even 1000. But I do think we have some more room to fall over the next 12-24 months. Who knows, we could bounce off this level and make a text book cup and handle on the ES and move to 2400. But as far as the daily goes, as I said in another thread I think we could see a snap rally before moving lower. EDIT: I just re-read James' quote about people expecting the markets to fall. I agree and disagree. I think it works better with actual crashes, such as the two times we tested 1250. Everyone expected the market to continue to crash and saw doom and gloom, then the markets reversed in their face. This time, with price steadily falling to these levels and the VIX remaining relatively low, that tells me that people don't necessarily expect it sort to speak. I'm not really sure how to explain it in words for everyone.

I trade the same technical setups, but my plan for each trade is different. No one trade is the same, and each trade has a different setup around it and I plan to adjust that plan as the trade works for or against me. I'm very discretionary, and it works for me. In fact it challenges me to learn more, and become more creative in my markets. Will it ever become completely automated? Definitely not. I pride myself in being able to make quick decisions by looking at a few charts, and being write most of the time. At the end of the day everyone is different. Some people are very specific and therefore have a very specific plan. They couldn't do anything else, and they trade markets that allow them to do that. What kills traders is they trade in such a way that doesn't agree with their personality. They might WANT to be highly discretionary, but they simply aren't. Or (one of my biggest problems for a while) they try to be very specific, and later find out that doesn't work for them. I've found two styles of trading that fit my personality very well. I know this works because I spend hours learning and taking notes. I am able to become creative, and use talents that I never thought I could employ while trading. The first one is the options market. When I first started I was completely lost, then I found how much math surrounded the options market and thats when I started to become more interested. I studied various strategies, practiced them on simulators while utilizing live capital for other various strategies. Eventually I began to realize what a friend had been telling me all along, that it was fools game. That's when everything started to click, I realized I could essentially be the house and sell to the newbie. I studied various professional traders and the strategies they use, and now I'm hooked. The second is the ES. I love the fast tempo and the competition. I can't say I'm as good as I am in the options market, simply because of time constraints. But I know I will become very proficient there too. But my trading plan for both is simple, it allows me to trade reputable patterns in the market but at the same time be discretionary and use my imagination to take advantage of various discrepancies in the market.

This is kind of OT, but I have realized that traders who tend to struggle the most (really just don't get it) are simply trading the wrong market :\ Or they don't give enough effort and screen time - again because they don't care and are trading the wrong market. That's probably for a different thread, but I like the idea of some basic trading rules to help someone get started. This could turn out well and help a lot of people get that little push. That doesn't mean someone should make a trading plan word for word what we discuss, but a small idea could help them get the ball rolling, so they could independently design their own system. If that makes sense. I found that when fast time frames were burning me out I would want to go back to my plan and tweak things. Eventually I just started looking at longer time frames, and it suited my style of trading and the way I read charts much better.

OAC - here is what I see. There is actually a technical term for this, I want to say it's a "tweezer" but I am not 100% sure. Whatever the name, it can prove to be a nice setup for a quick retracement play. Since the lows are the same, it shows someone came in and bought and didn't allow price to go any lower. Since there was previous support there, it makes for a nice risk/reward setup. A personal trade I would use would be a morning gap play. I would check out the TRIN which closed at 1.71 which is fairly bullish, and I would go long at the close then sell at the open with a gap higher. Switching over to the ES, a lot of volume came in the last two days. We had a few small body candles and a "hammer" followed by this candle today. But the low of the hammer was never taken out, thus that is still a valid trade if you entered at the close (Personally I took this trade, but got out with a gap up this morning). I have talked about a retrace to the 8 ema, and we got that today as you can see on the chart. In a case such as this with such a favorable risk/reward I would actually setup a position to take out a portion with a move back to the 8ema where I would exit half, then hold on the other half to test the 21 ema. With such an exhaustive sell off and major support, I wouldn't be surprised to see a sharp rally to this level. We are 1266.50 now, so a move up to 1300 would be substantial, and the potential risk would be very little.

Speaking of well... the ES. Any man will see what I see in the monthly chart. Now while I was looking at this and laughing, I quickly changed my tone to an, "Oh shit!" Check out the 50sma (green) - it's around 1308. Now over to the daily, the 8sma is around 1305. That's pretty damn close, and could be a major point to watch for this week. Going back to 2001 when we crossed below the 50sma, bad things happened. So I think this will be a very important area to watch for this week.

Before you go out and start trading options on the eminis I would start on the SPY first. You need a solid understanding of all the greeks and how they all work for and against you. Not to mention the options on the futures are expensive, so personally I would rather sell the options and collect the premium while theta and vega work on my side compared to just buying naked calls or puts for short term swing trades. But just about any trading website will talk about options, if you can't find one then investopedia has a lot of stuff, and some good articles on greeks such as position delta, volatility, etc.

The c***k wants what it wants :rofl: And yes, I stole that from Weeds (most ridiculous show ever, but funny) Back on topic.. Here is why I think we can move sideways, or bounce back to the 8 EMA. Nice spinning top at support with nice volume.

Because I can't fit enough girls in the first one :rofl: The overall picture of the market looks bad. I sold my short term put position on Friday, and then loaded up with calls to hedge the longer term position. I think we'll move into the 8 EMA where I'll be more willing to add onto that long term short position if the right signals are in place. But I do think in the next few weeks that 1250 level will be tested. We're only 20pts from the 8 EMA, so that really isn't a huge move at all with the recent volatility.

Whata dick move :o

Like Denise said, it's really only information and it has more to do with how you act with those emotions (if you do anything). I also think that greed has a different meaning to different people. For example I drove a Porsche yesterday, and now my goal is walk into the dealership and buy one before the end of next year. To some, that drive for something materialistic may seem greedy since I'm not even 21. To me, it's just something I've wanted my entire life and I have a drive to get it. If that's what helps me focus on my job as a trader, then so be it.

I do think we'll get a bounce soon to the 8 EMA, by then it will probably be around the 50% fib retracement level. My next short target is 1275. Notice how yesterday that wick hit new resistance and was rejected? That was a great signal to go short into today.

I agree, I think managing your emotions is the most important aspect of trading. I guess I never really got into a whole lot about trading with emotions in my original post. But I can say that if you're experiencing a lot of emotion it can come down to two things. 1 - You haven't learned how to control your emotions yet. And this is something that should be focused on very closely as it will make or break you as a trader. 2 - You simply aren't trading a style of trading that fits your personality. I know for a fact I couldn't hold an ES position for more than 20 minutes. But I can trade aggressive breakouts with options. The difference is one fits my personality better than the other. If you are consistently breaking your rules and seeing emotion, it might be your psychological cue that you are trading the wrong market/time frame and you should maybe experiment with something else. Each trader has their own "niche", and just like with everything else in life you need to figure out what that is.

This is mostly based around stocks and trading breakouts, but I think it can carry over to the YM and ES. Anyways, I figured I'd share my thoughts. Yesterday was basically a kick in the ass for my bottom line. Fortunately for me, I've been through those days and I know how crazy a FOMC announcement can be. Unlike a lot of people, I kept my cool and did what I do best - look for potential opportunities. I knew the FOMC announcement would cause volatility, and I knew newbies would be getting killed left and right. My job? Jump in when they think all is over, and steal some more of their money. I quickly reviewed my weekly support and resistance levels for the ES, and watched them closely after the FOMC announcement. In typical FOMC fashion, the ES rallied, followed by a sell off - then another rally. Fortunately, my weekly level of 1330-1335 held it's ground. With the inverted hammer on the 5 min, I opened up my put position. I bought several July $132s & $2.32 a piece. They are now trading over $4 a piece - you do the math. Here is a chart for you savvy traders... Why do I post this? Well from time to time I like to read responses to several blogs I find entertaining. One of those blogs happens to http://www.optionaddict.net I like his style - which is very similar to mine - and his tone is entertaining to read. I never read the responses because, well frankly I don't care. I know it's full of newbies asking stupid shit that I've heard a million times on other boards. But today was different, his blog was about keeping to your plan and blablabla. As you've already figured out I didn't do anything yesterday but keep my cool and do what I would do any other day. Positions that no longer worked, I got out. Positions that still worked, I stayed in and weathered the storm, that's part of the job. My job is to manage losing money. Can you do that and stay calm? Here are some of the responses I have read that were interesting. They go running to this guy to hold their hand. If they just looked over their plan, and had a solid risk management system in place, then they wouldn't need someone to hold their hand. I'm willing to bet these people have too much invested in this particular position, and don't have any sort of risk parameters outlined. I would even go as far as to say they don't know why they are in the position... Like this guy... He got stopped out of positions with small gains.. but others with large losses. How does that work? Obviously he doesn't have his risk properly outlined. You should never even consider risking more than you can make. Think that through first. Sometimes things change and you need to exit early, but if you find that you get stopped out with small gains and big losses, something is wrong. It's not the markets fault, it's yours, pal. Been there, done that. I've done more than just turn off my computer and walk away. Sometimes that works, but after over a year and a half of trading I've started to realize that doesn't do anything but clear your head. When you turn off the computer and walk away when the going gets rough, you miss out on some of the best opportunities available to you. For example my ES short from yesterday, if I walked away because I hated seeing the big red number in bold I would have missed that entry. So if you're new, that's fine. Just make sure you exit everything then walk away. Just realize what you could be missing out on. When I first started, I could really relate to that. Except that the pain wouldn't leave the next day, I'd usually be down another grand because I did something stupid trying to rescue all of my positions. This is a continuation of the post above... He pretty much hit the nail on the head. When it feels like everything sucks, don't walk away. Instead, review your charts, go over your weekly or daily plan, and figure out what needs to be done. Just like you would any other day. Look for new opportunities. If you walk away you rob yourself from invaluable learning experiences called screen time. The more you see, the more experience you get, the better you will become. You can't make a living out of this if you can't handle the occasional fuck up. Everyone sees charts differently, and everyone has a different style of trading. That's why in the long run, running to someone to hold your hand won't work. You have to trade the way you see it, not the way someone else see's it. Of course you can ask them their opinions, but at the end of the day it's what you see that matters. Don't even let me tell you how much money I've lost because of what someone else saw. If you don't see the pattern, or it doesn't fit your style, move on. There are countless opportunities every single day, look for the ones that suite you, not some random guy you've never met. Lesson of the day? Stick to your plan. If you can't handle the stress of your current style of trading, then move onto the next style. There is nothing wrong with that, no loss in dignity.

I know I did I bought puts, instead of trading the ES. I know, not exactly TL friendly but whatever. I bought July $132 puts at $2.32, now they are trading near $4. Not as big of a gain had I shorted 1 ES contract, but had this trade turned against me it would have been bad.

It's all talk to appeal to the idiocy of the public. They need to focus on far more important economic concerns then the price of oil. If in fact all that volatility is due to speculation, then it will all leave some day which will cause the price to drop. When the Dow, S&P, and Gold are all going shit f**k crazy it makes sense to throw some money in oil which seems to only go up. It will hit a tipping point, and all that money will be wiped out. Look what happened to gold.

Each trader is different, you need to find what makes you a good trader and not worry about how anyone else trades. Some traders are great with fundamentals, others are great staring at the order book, and others do well with charts. Frankly I wouldn't worry about the banks, I would worry about supply and demand as a whole and how it pertains to your time frame.

I think it really depends on what style of trading the bank is doing. Different parts of the bank are going to have different strategies. Some don't require charts, others do. Out of curiosity, why do you ask?

For a while this thread was the only reason I came over to TL. I got that little e-mail everyday and that's what got me here. Now I feel like I'm only on TL to joke around. A friend of mine was perplexed about the ES moving down today. I wasn't too surprised, but my reasoning sucked. My reasoning was the spinning top from several sessions ago was the signal to go long, and then price hit the 50% fib retracement and sold off. So aside from personal experience and seeing this setup before, I wasn't really sure what to tell him. Any ideas? The 8 EMA also displayed resistance, but that's not exactly the best reason either.

I had a similar discussion about this with a friend earlier. For some reason I don't like looking at USO instead of the CL contract... but I understand not everyone has access to the CL quotes. But here is CL anyways. We have the nice "flag" (it doesn't really matter what you call it) followed by that huge WRB which appeared as a gap on USO. Since then we tested the .50% retracement levels and bounced back. Since then it's just been doji style moves every day but CL is still forming somewhat of a triangle within the WRB. While I don't think the trend for oil is done, I do think it has a good chance of falling down to the 50sma (green) and then rallying from there. Personally I wouldn't short oil, because it can be so volatile I would rather wait for a more powerful signal to short. Triangles like this are hard to trade unless you get a breakout, if you entered now you might as well roll dice in a casino.

Did you have all the indicators set correctly? I prefer at least 9 per chart, that way I get better odds of one being the holy grail. I did find the secret to trading though. I plan on selling it in my candlestick book, but instead I will give it out free today for my loyal TL fans. Ready? I give you, the holy grail indicator.

And make it extra confusing for the VSA boys to fit in :doh: "The NHL is a dying sport candle is only valid if followed by a James likes busty blondes with a bit of plastic if and only if that candle has a wick of 3 ticks to each extreme. If it is less than 3 ticks, that candle is null and void and warrants a short at all times."

Steve Nison is a joke. Wait till our book comes out, we'll find him under the bus bench crying. Him and his silly suits.... pfft We'll have a whole chapter on the psychology of candles and their sports related meanings.

What about table tennis? That is quite the intense sport, I say we name a candle after that.