I get to eat some humble pie.
As many of you know our "Trade Triangle" technology issued a signal to go short crude oil on 6/4. The question was whether this was a good signal or a bad signal. The truth is it was a good signal, why do I say that? The bottom line is when you're trading with discipline you must take the signal and try not to over think it. If crude oil had moved down to $120 and then down to the $115-110 level we would have looked like heroes. Instead crude oil had its largest percentage move in seven years.
The last two days in crude oil have been extraordinary by anyone's imagination and you have to respect the market.
One of my heroes in the market was a gentleman named Bernard Baruch. You basically don't hear about him anymore, but his teachings about the market are extraordinarily useful. You may want to read his book, "Baruch: My Own Story," which I highly recommend.
One of my favorite sayings that Baruch gets credited for goes like this: "The main purpose of the stock market is to make fools of as many men as possible." Well that certainly happened to me this week on the blog when I issued that signal on crude oil. Would I do it again? You bet, because I know the odds are in my favor in the long run.
If you've been reading this blog for any length of time you know that we stress diversification and discipline in trading. When you do that, you really do win out in the long run. We have had hundreds of profitable signals trading crude oil and our gains in crude oil in Q3, Q4 and Q1 have been outstanding. Now, I agree with you with this last trade in crude oil was a doozy. But only seeing this occur every 7 years is not such a hardship.
Many traders would be afraid to take the next signal right after a big loss, but sometimes that's the best time to do so. Many of you may remember the gold signal and how that worked out.
The key to the market, is to be consistent in your approach. Many traders will trade a market and then suddenly say it's not working, and go onto something else. Then the very market they were following has an enormous move that they were waiting for.
Getting back to our sell signal in crude; would we take the same signal again? Absolutely! Not to take the signal would be a mistake because that could have been a signal that could be very profitable for us. No one knows the future, the only way to successfully achieve profits in the marketplace is to approach it with a game plan and a roadmap that has been successful over the years. Traders come and go, but human emotion is the one constant in the marketplace.
As we have stressed in our Traders Whiteboards Series, diversification, discipline and the use of stops are some of the most powerful tools you can employ in your quest to make money in the market. It doesn't matter if this is crude oil, Apple, Dell or the Euro
Another one of my favorite Baruch saying is this, "Do not blame anybody for your mistakes and failures." He also said this: "Whatever errors I have committed, whatever follies I have witnessed my private and public life have been the consequence of action without thought."
Here is my last comment on the Bernard Baruch and you can apply this to any market: "Without control over your emotions, there is very little chance for profitable success in the stock market."
Well that's about it. That's about as much humble pie as I can eat at one sitting.
Every success in the markets, have a great weekend.
Adam Hewison
Co-creator of MarketClub.com
really gr8 article.
LAST UP FOR 144 USD & 23/24/25 JUN BLACK DAY FOR CRUDOIL
--------crud oil for 144usd im100% sure
than Q
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than Q what?
-Lindsay
One of my favorite sayings that Baruch gets credited for goes like this: “The main purpose of the stock market is to make fools of as many men as possible.” - This word Quite Impressed me
Regards,
Rajandran R
India
We're players now boys
I agree with you James but fundamentals are discounted into the market very rapidly by an army of very clever analysts.
Ultimately it's the price that is important. In that sense the signals were valid and have been right many times in the past, in many different markets.
Personally, I say who cares which market it is. The name of the game is to make money, by identifying the trends and trading with them.
Sorry but WHY would you short a commodity that:
1. Has been booming in price and shows no signs of topping out just yet;
2. Is a product which is critical/indispensible to the operation/functioning of the gobal economy (unlike some precious metals and some other commodities)and has no readily available voluminous substitutes;
3. Is a product whose global supply is barely able to keep pace with demand - and such demand is now rising faster than supply growth
4. Is a product whose global reserves are now RUNNING DOWN!
5. Is a product traded in USD at a time when the US Treasury and FED (bless their little hearts) are doing everthing to save their Wall St mates even if it means massively inflating money supply and devaluing the USD(which they have achieved)in the process. A deteriorating USD, which continues, will not produce substantially lower sustained USD oil prices. Nor will the currently known fundamentals.
In my humble opinion, oil has not yet reached the bubble stage of the current cycle and thus is an unsound short. With a sick and declining equities market to attack why would you look at oil for shorting opportunities? IMHO in current conditions oil is a commodity to buy on significant weakness until it becomes clearly overbought - and we might expect it eventually will. We might also expect that if there is another significant broad breakdown in world financial markets the oil price will be hit as well.
Realistically, what happened on Friday if you took the short signal and you placed your stops appropriately for your risk profile is that you were stopped out for an acceptable loss. It's important to understand the market you are entering, crude is by any measure a raging bull market as are all the energies. This helped me filter out this trade because since February there has not been a single close below the 40 day moving average, what we saw was the price come back to the 40day MA and bounce, as it did in early April and May. Filtering trades (40%-50%) in my case is critical, on a monthly basis it makes a huge difference to my profit margins. In the end if you had done the right thing and followed all the signals since February in crude, heating oil, RBOB and nat gas you would have made a lot more money than you may have lost on Friday.
Even though I filter out alot of the trades TT technical indicators and market information make me very confident in entering trades or filtering them out.
I'm glad I don't have to justify every losing trade I've ever made.
I have to admit I was somewhat shocked at the latest TT sell signal in crude as I had been waiting for $120 support to buy. Perhaps the horizontal support of crude at $120 could have filtered the level of risk in the TT signal, or should this be up to the user/trader? I would prefer it be left up to the user to enhance the sophistication this long term proven TT program. TT is based on a study of scientific probabilities and its repetitive success is proven science, as soon as you filter the data of the program you are tampering with its long term viability. I use some of my own scientific methods of trading and the key to their success is the (cash flow) continuity in the logic of historical probabilities, whereas discontinuity is influenced by emotion. Mental trading strength is built on the foundation of logic!
I, as a newbie trader to be would also like Adams insights into stop-loss orders when using the TT system.
I have found that not trading any market in a sideways consolidation phase has saved me time, money, and needless frustration. Why bother with high risk/low reward situations when there's always a market that is ready to drop from its lofty ascension,or ready to move up from the depths of despair.But be careful.....overbought and oversold stocks need confirmation that they are indeed ready to reverse their trends,and this is where the trade triangles work best. If you are unfamiliar with what a sideways consolidation is,or what it looks like,read up on it,it is just as important to recognize this pattern as it is to recognize an uptrend,or downtrend!
the oil seem to be much profit booking position sail at 6150 and stop los is 6250
Youre nuts. this is the end times, dude! We have no fed; we don't have enough people to vote for rate hike even! this is it! Oil to 225 is my prediction, gold to 2000 or more.
The dollar is falling like a knife through butter.no support.
read jeremiah and John in the BIble.
Oh, and Revelation.
Is Iran being bombed yet? Is Jerusalem? It's OVER!
Like all breakout systems, TT is subject to whipsaws that fritter away long term gains. Adam's systems of point scores go some way to filter out and so mitigate some of these losses, which mostly occur during the 70%-80% of the time that markets track sideways. It appears to me that use of those filters is necessary but not sufficient to ensure long term gains.
Any comment that Adam might make regarding supplementary filters would be appreciated.
Adam, please correcty if I am wrong on this but if you use the 3 weekly high and low to determine the trend then Friday's market action could be interpreted as a trend reversal.
The weekly chart indicated a sell signal on 4th June @ 122.60 and the stop loss at that time would have been 129.35 based on the daily chart.
On 5th June at midnight, which is what I use to determine the end of the trading day, the 3 day high was 127.95 and the stop loss was moved to the price.
During the 6th June, the stop was taken out at 127.95 for a loss of 5.35. Now I am looking for another short trade opportunity at 122.60 or a long trade based on weekly chart of 133.70. A long trade trade was triggered at 133.70 with a stop loss of 122.00. The price at the end of the day was 138.54 with an unrealised profit of 4.84.
This is how I use the Market Club trading methodology.
Best Regards
Guy,
Yes, you are following the Trade Triangles perfectly. Looks like you are making some nice profits. Keep it going and remember DISCIPLINE Is the key to market success.
Adam
Hello Adam and fellow traders.The OIH ( oil services holders ETF ) seems to be heading higher and higher, inspite of a negative divergence since April 21, 2008 in the RSI and MACD. In all of my days of trading, I have never seen price movement ultimately win over these indicators. I agree with Margaret.....todays stock market's big loses were due largely to Market Makers clearing out the shorts, but more importantly to a realization that our once strong and resilient economy is undergoing an irreversible change.....this decade has ushered in all the good, bad, and the ugly that a Global economy has to offer....welcome to this brave new world.And Adam.....Market Club offers so much in addition to the Trade Triangles that are so useful.....well I feel that you need not feel more humble than is healthy.....Many thanks.
The way system is advertised on video clips is that you pretty much blindly follow monthly\weekly signals for trend and weekly\daily for entry\exit points (i.e. without emotions). Daily exit point for oil appeared today on the chart when market was open and oil was way above 130. I understand the point of using stops, but then what's the point of following "trade triangle" system and it's recommended exist\entry points ? I agree that recommended stop price would be really nice to have right on the chart. I've heard yesterday that as soon as oil broke 125.x institutions started buying. Obviously it was some important resistance level that would've been nice to see on the chart.
Are we still bearish on oil based on last signal on monthly trend? Should we wait for daily signal to go short again?
Max,
Follow the signals. Here is a video link on how we trade oil.
http://club.ino.com/trading/2008/04/5-ways-to-knock-it-out-of-the-park-this-week/
Adam
A good honest commentary, Adam.
As for today's oil spike, one can only speculate as to why the powers that be decided to squeeze oil shorts today. Maybe, just maybe, it had something to do with the "other" data that came out today (a big jump in unemployment)?... Talking about the art of distracting the public from the real cause/effect relationships.... When the stock market is falling because of the rapidly slowing economy (and yes, rising unemployment), the weapons of mass DISTRACTION (the so called business TV) are blaming the fall on the $139 oil. Of course, the same media usually tells us that inflation is not a problem(despite high energy and foood prices), and let's not forget that the stock markets has recently been climbing along with a rise in the price of oil. So, why is today's jump in oil an issue for stocks? Well, it isn't. Something else is an issue. But everybody on the tube keeps incessantly talking about oil like it has something to do with it. Oil is just the inverse of the $USD. Nothing more. But oil happens to be a very convenient scapegoat. So today we are blaming all the problems on oil -just to make everyone feel better, I presume.
In my humble opinion a sell signal in oil that had been given, was apparently acted upon by technical traders (who got screwed today), and these traders apparently learned a lesson today that you should not short an overheated market. Sometimes it pays to wait.
I am going out on a limb. I believe you are in the blow off stages of a collapse in the price of oil. Yesterday and today are the best indication of a blowoff.............
Adam! You do not have to opologize. Your system works and when market goes against us,there are stops to get us out.
I agree 100% with adam, market club is an excellent alert service and the odds are in our favor if we follow their advice to leave the emotions out of the game.
Do your homework, see that the last 3 weekly shortsignals absolutly gave you no profit, wait for a sell signal on the daily to confirm the weekly short signal. Besides that anyone knows that crude will hit 150$ very soon, so why hoping crude to fall.
So thank you Marketclub for todays crude oil long signal, i only wish i could get the alerts for my portofolio by email once they occur.
It will be much better if you could put s.l. on
these trades .
Adam,
it takes a man of integrity to admit that a call didn't work out as planned. To your point, a trader who is diversified would have limited their exposure in any trade. Further, using a stop loss would have limited your exposure even more.
If you do well in 2/3 of your trades and limit your risk, you will always be ahead. You've shown consistency in several quarters - most people can't say that.
Triangles work far more often than they dont
signal for oil was right technically ,but ,but
your trading traingle appears 100% technical which is really unrealastic .i mean it would be better if you take into account the harmful romurs and news from those who bought oil unfortunately ,invistors listen to their news .this is market .they would be angry if you sell the oil at this period of time .hope you consider my advice ...to consider
combine between technical and the news .this is the second time they surprise the market with such a harmful moves
unfortunately ,the world get hurts from the soaring of oil .we would feel and be better if we hear the dollar is soaring and soaring >>>not only for trading but olso for our daily lives in the other part of the world
Does the Trade Triangle system recommend where to put stop losses or is it up to each trader? Please offer some explanation as to the headline on ino today that crude was up $6-7 because some analyst at an investment bank said crude "COULD" hit $150 by July 4th. No crap! Everyone already knows that. they also know it could be $100 but they don't sell in masses. There is no way one analyst in an industry that isn't crude oil could possibly control so much response from so many traders to make the price do that. If no one knows why the price is doing what it's doing, just say so. Citing that as the reason for such a large move seems ridiculous. I will gladly admit that's my "opinion". But does that sound nuts to anyone else?
Your 'Sell Signal' may still be right ...just a little early. Demand destruction is happening everywhere, but not yet understood. The news of Israel planning to attack Iran is now proving to be false (after all, the US would never have halted additions to the SPR if this were likely - think about it). With next Wenesday's EIA report, crude may well retest this weeks $122 area (look for HUGE builds in both crude and gasoline). Good luck.
Adam, Can you comment on today's $10+ move to $139+ in oil in relation to today's blog on the sell signal on crude? How did you trade this turn around? Thanks, Lenn.
Was wondering what data you based this statement on:
"Crude oil had its largest percentage move in seven years."
Did today's jump beat out the '03 invasion of Iraq?
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Oil prices made their biggest single-day leap 6/6/08, dragging the Dow Jones industrials down nearly 400 points. The meteoric rise of nearly $11 for the day piled atop an increase of almost $5.50 the day before, taking oil futures more than 13 percent higher in just two days, easily a record on the New York Mercantile Exchange.
Let me know if I can help with anything else.
Best,
Lindsay Thompson
Director of New Business Development
Well, yes, every trader does make mistakes, yet without them we could not see a progress in our trading. As you always mention rules and discipline in trading I believe your system is working and the last sell signal you issued was wrong, yes, we all see that, but that does not mean your trading strategies do not work. As far as I ve been watching your videos, the trade signals basically work. Perhaps in this case it did not, but if any trader used stop loss accordingly, there would be no such thing as a huge loss because Crude oil did not jumped up in a second but was moving up gradually. I did well on long position of Crude oil and even though you issued sell signal and oil went up I will be looking forward to your next trade signals. Every success in trade
Some people just don't learn. You can rationalize all you want, but fact is, you blew it. Wise up. Your cute charts with their "signals" are just BS. I doubt Mr. Baruch would be trading at your side.
John,
Thanks for your feedback. In America and you are entitled to your opinion. If you say we blew it, then that's your opinion. We have thousands of members of MarketClub who might disagree with you on that point.
Every success,
Adam
Sell your SUV signal, definitely.