A great way to trade crude oil on WEDNESDAYS

goldenedge

Well-Known Member
#1
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.
 

goldenedge

Well-Known Member
#4
Sorry I forgot about this post. I would have never even remembered this if I hadn't looked at my history today.

Okay, my upload quota exceeded so let me link the yesterday's chart first.
https://postimg.org/image/eglp0xsp9/

My analysis that I posted here (I follow the same)

Step 1: Don't trade the first 5 min candle.

Obvious. Unless you want to get caught in a whipsaw. It's not worth risking to gamble on that big movement hoping that it goes in your favor. Most of the time you will be stopped out.

Step 2: Understand the length of body and tail.

The candle had small body with huge tail on both sides. So, I waited for a clear trend to form. I didn't trade the bearish candles that followed the data candle because I was skeptical.

Always be skeptical when there is a small body with a large tail.

Step 3: Don't look at the data.

Obvious. Data doesn't make sense. As usual. It's a waste of time to look at the data because the market had already priced in.

I never look at data.

Step 4: Always wait for candles to close.

Since I was skeptical about the red candles that followed the data release, I didn't trade it. That "large tails and small body candle" implies that the large guys are struggling. So I waited.

Then the 4th candle (after the arrow) had closed. That's when I knew we might be headed for the top. I wasn't sure yet. I waited for more data.

If I had traded the candle before closing I would have caught in a very bad trade at that time.

Trust me on this. I made this mistake a lot of times. Don't do it. It's not worth trading before the candle closes. Don't be greedy. It somehow always goes on the opposite direction you trade.:rofl:

I opened a trade around 21:41 because that's when I knew that we're going up. The candle from 21:35 to 21:40 had no tail. Strong bullish sign.

Step 5: Don't trade from 6:30 pm to 8. (9pm yesterday)

The chart speaks for itself. Look at what happened at that time. Nothing. Large guys will unload/load at this time so the movement will be chaotic and will mostly range. Not worth it.

Yesterday was a lucky day. So, the movement was significant. This happens once out of every 25 wednesdays. Is it worth risking a position at this time? :annoyed: .


I use the same analysis always. It works most of the time. I'm happy with it. I could post charts from previous wednesdays and prove my analysis but that's not my problem. Don't ask me to spoon-feed my analysis. It's up to the reader to decide what he wants to do with the knowledge I shared here. :thumb:
 

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