Trading Financial markets : Oil / Brent Crude

Long, short, Bitcoin, forex - Plenty of alternate market disuccsion.
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Archangel
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Mon Aug 24, 2015 2:39 pm

marksmeets302 wrote:
There no place to hide now as each technical level is hit and broken through
I'm a fan of technical analysis, but at the same time I think the current methods are completely worthless. The efficient market hypothesis can easily be disproven; the markets are not random. With fractal analysis you can prove that there is a long term memory effect. So there must be ways to exploit this, based purely on price data alone. The momentum anomaly is such a way; trends persist for longer than you should expect if the EMH were true. But if TA is taken further, with levels, support and resistance it completely loses its value. Which is frustrating so I keep looking for new approaches :-)

I believe that different investors have different investment horizons. An investor with a net worth of 10K and fully invested in stocks is I think close to puking his guts out at the moment. An investor with a net worth of 1M and diversified into 60% stocks and 40% cash and bonds is starting to get a little bit grumpy at the moment. A high net worth individual invested in many more asset classes and might be excited to buy some more stock at lower prices. A multi billion dollar pension fund just looks at its models and might rationally decide that given the interest rate and price/earning projections it is almost a good moment to rebalance.

The first investor is selling to the high net worth investor, and will be pleased for the first couple of days that he did so. Then the pension fund decides it's the right moment and starts buying. Leaving the small investor with the idea that he got screwed again.

"When things get so bad you're about to puke, you should probably double up" (Marty Schwartz)

So look for a small investor and ask him if his carpet needs cleaning.
You bring up an interesting point about EMH and the behavior of different market participants. But I look at the behavior of the participants a little differently. There really aren’t many individuals with 10K who are fully invested in individual stocks on their own, at least relative to the assets of institutions. The person with 10K invested is more likely to have that in a mutual fund, pension funds etc. The institutions, then, for the most part aren’t trading their own money. They’re trading all those 10K accounts put together. The institutions don’t react to market movement as much as they buy and sell according to their 10K clients deposits or withdrawals into the funds. So I’m not sure if I would make a strong distinction between the individual investor and institution.

Another thing that I’ve seen with large (1M) accounts is the idea of utility. The relationship between account size and account risk isn’t linear. Most people don’t increase their risk 100 fold if they go from a 10K account to a 1M account. The incremental $1 that the 1M could make by increasing risk doesn’t mean as much to that person as the $1 does to the 10K account. So, after the market sells off, a 1M account may not be increasing risk equal to the risk that 100 10K accounts are shedding.

Now, there are some institutions that do trade their own money, but they can get as panicky as the 10K account. I think rather than account size, the distinction would be made by the level of market awareness and skill of the trader. Whether someone makes the jump from vol = danger to vol = opportunity isn’t tied to net liq.

That’s my .02 anyway!

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Archangel
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Mon Aug 31, 2015 8:39 pm

Welcome rally in Crude Oil in recent days
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Euler
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Wed Sep 02, 2015 4:14 pm

The Seven Books You Must Read If You Want to Understand Oil

http://www.bloomberg.com/news/articles/ ... rstand-oil

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marksmeets302
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Mon Dec 07, 2015 5:35 pm

oil entering new year-long lows... CL future trading at $38 !

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Euler
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Fri Dec 11, 2015 8:38 pm

Below $38 now, amazing really, apart from nothing amazes me any more!

marko236
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Fri Dec 11, 2015 8:58 pm

Euler wrote:Below $38 now, amazing really, apart from nothing amazes me any more!
The plans to hurt Russia and Iran are going to plan, i don't think they can make money at that price and could it reach $30?

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Euler
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Thu Jan 07, 2016 11:23 am

<$33, not sure where the bottom is. People saying it's the bottom tells me there are positions to shift so it probably isn't the bottom. Amazing really.

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Dallas
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Thu Jan 07, 2016 11:51 am

I shorted this about 13mths ago at around $78 and was over the moon to close a few weeks later at just over $50
I did toy with the idea of shorting it again when it broke $50 in the summer but could nt see how it could go much lower

Euler wrote:<$33, not sure where the bottom is. People saying it's the bottom tells me there are position to shift so it probably isn't the bottom. Amazing really.
In a episode from Dallas S5 in 1981 J.R had stock piled millions of barrels then the price began to drop and Miss Ellie stepped in cutting there losses and selling at $33 a barrell!

andyfuller
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Thu Jan 07, 2016 12:33 pm

With a long term view I think there are some good opportunities to be had at the moment in the larger oil and mining companies. Yes they may fall more but by averaging in I am happy building a position for the long term. I have a long time horizon, years if not decades and therefore don't really care about the short term movements other than getting some good companies at a discount, as long as they don't go bust ;)

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Euler
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Thu Jan 07, 2016 2:12 pm

Y, there is a big movement among value investors to try and identify the lowest cost producers in the hope of a rebound at some point. The industry is in a total mess at the moment, so I think quite a few wont make it.

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