Is only Technical Analysis enough for commodity trading

[pannet1]

this post may answer some of your question.

that was about technical analysis.

so we want a easy money making machine in the form of US Oil. It goes up so MCX Crude goes up too with a 5 min lag. It may have worked like that in the past but not any more. the problems you all mentioned are very true like the attempts you make to read it.

we all trade against or for USD, ultimately. so it may be enough to gauge the strength of USD against the 3 majors namely GBP, EUR and JPY. If all the 3 instruments point to strength / weakness, then you start with that bias. If they are not in sync, then be ready to witness bloodshed because eventually they are going to be in sync.

for me more than the predictive nature of looking at US Oil, attraction is it has very less noise in comparison. this may be because of the gaps. Also MCX Crude price is not the real supply / demand because its merely following US Oil.

One may look at CAD too for the bias but they say Canada is a very small part of the OIL industry. I may be wrong too.

I am not experienced in commodity trading but thats my future. right now, i am waiting for capital but i am actively doing paper trade. So i am looking for breakouts in 5Min chart and see if the same is translating in MCX Crude. If it does not match up or if i am not comfortable, i don't trade.

my US Oil trading was more than satisfactory but MCX trades is not that profitable. May be its because I am yet to arrive a the right lot size.

my US OIl trade results are in the link of my footer.

hope i have explained properly now. cheers

 

[mohan.sic]

that was about technical analysis.

so we want a easy money making machine in the form of US Oil. It goes up so MCX Crude goes up too with a 5 min lag. It may have worked like that in the past but not any more. the problems you all mentioned are very true like the attempts you make to read it.

we all trade against or for USD, ultimately. so it may be enough to gauge the strength of USD against the 3 majors namely GBP, EUR and JPY. If all the 3 instruments point to strength / weakness, then you start with that bias. If they are not in sync, then be ready to witness bloodshed because eventually they are going to be in sync.

for me more than the predictive nature of looking at US Oil, attraction is it has very less noise in comparison. this may be because of the gaps. Also MCX Crude price is not the real supply / demand because its merely following US Oil.

One may look at CAD too for the bias but they say Canada is a very small part of the OIL industry. I may be wrong too.

I am not experienced in commodity trading but thats my future. right now, i am waiting for capital but i am actively doing paper trade. So i am looking for breakouts in 5Min chart and see if the same is translating in MCX Crude. If it does not match up or if i am not comfortable, i don't trade.

my US Oil trading was more than satisfactory but MCX trades is not that profitable. May be its because I am yet to arrive a the right lot size.

my US OIl trade results are in the link of my footer.

hope i have explained properly now. cheers

Dear Pannet,

question is not about general TA, nor about money management.

As confirmed by you in above post - If Mcx price is mere follower of nymex price and you are looking for 5 mt break out in US charts and see if the same if happening in MCX... Are you are looking at same easy money machine like US oil and want to trade the lags in mcx ?

Anyway, my idea is not to arrive at some easy money making trick like, X goes up first and later Y goes up, So we jump in between X and Y. and make money. The basic idea is to understand, where actually price discovery happens and the correlations.

I am asking this because it is important for non technical traders like me to understand where actually price is discovered and what follows.

.

 

[pannet1]

Dear Pannet,

question is not about general TA, nor about money management.

As confirmed by you in above post - If Mcx price is mere follower of nymex price and you are looking for 5 mt break out in US charts and see if the same if happening in MCX... Are you are looking at same easy money machine like US oil and want to trade the lags in mcx ?

Anyway, my idea is not to arrive at some easy money making trick like, X goes up first and later Y goes up, So we jump in between X and Y. and make money. The basic idea is to understand, where actually price discovery happens and the correlations.

I am asking this because it is important for non technical traders like me to understand where actually price is discovered and what follows.

.

mohan,

most of the commodity traders had traded like this (1st para) for many years. after USDINR started trading, they are all screaming because the wins are smaller and losses are bigger. i am not saying you are expecting the cash cow. in general, its very difficult to see many charts at once and pull the trigger.

if you are not a technical trader then you are a fundamental trader right. if i were you, i would gauge the strength/weakness of USD and supply/demand of CRUDE. like all fundamentals they announce one thing to the world and the opposite happens.

 

[mohan.sic]

I agree that the idea of profiting the from the lags was always there and it lives.
But How do you know that commodity traders were mostly trading only lags for many years ?
And why do they scream because of usdinr ? Pls give a trade example why usdinr will make their wins smaller.

Exactly, it is difficult to see many charts. So which market chart to follow ?

How would you guage strength/weakness in usdinr?
How would you look at supply/demand of crude ?

Sorry to post 5 questions at a time.

 

[pannet1]

I agree that the idea of profiting the from the lags was always there and it lives.
But How do you know that commodity traders were mostly trading only lags for many years ?
And why do they scream because of usdinr ? Pls give a trade example why usdinr will make their wins smaller.

Exactly, it is difficult to see many charts. So which market chart to follow ?

How would you guage strength/weakness in usdinr?
How would you look at supply/demand of crude ?

Sorry to post 5 questions at a time.

sorry running short of time and have health issues.

you agreed that there is lag. so if we are leading then we wont see US Oil right. they were profiting then but not anymore (or) that much. i just began and i am not able to profit that much ... so i just connected the dots ... to reason their problem.

i said strength / weakness of USD not USDINR.

for CRUDE S/D you did not answer what type of trader you are ... if you are a fundamentals trader, you would have some kind of way already.

some examples.

trump told saudi to reduce the oil price.
a new oil producers union ... something broader like carbon is formed.
venezuela crude price is falling ... mines are defunct .... etc etc

 

[mohan.sic]

sorry running short of time and have health issues.

you agreed that there is lag. so if we are leading then we wont see US Oil right. they were profiting then but not anymore (or) that much. i just began and i am not able to profit that much ... so i just connected the dots ... to reason their problem.

i said strength / weakness of USD not USDINR.

for CRUDE S/D you did not answer what type of trader you are ... if you are a fundamentals trader, you would have some kind of way already.

some examples.

trump told saudi to reduce the oil price.
a new oil producers union ... something broader like carbon is formed.
venezuela crude price is falling ... mines are defunct .... etc etc

pannet pannet pannet

so if we are leading then we wont see US Oil right. they were profiting then but not anymore (or) that much.

Not able to understand what you are trying to explain. Really no. And I expected a trade example.

i just began and i am not able to profit that much ... so i just connected the dots ... to reason their problem.

So you just began and trying to learn like me. Then I think both of us should learn from some experienced trader here.

i said strength / weakness of USD not USDINR.

what difference does the question make ? when you say USD, for us it obviously means usd against inr in Indian context when we are discussing US market ( usd ) to MCX ( inr ).Right ?

if i were you, i would gauge the strength/weakness of USD and supply/demand of CRUDE.

I thought you have some method for gauging supply/demand of crude. Its okay.


I never traded commodities. I am not a trader yet in this segment. I know some basics like inventory data, exchange rate impact and so on. But as a trader I know that, theory is theory and practical trading exp is different and genuine answers from real traders can cut short our leaning curve.
In this case, Instead of starting from basics, following mcx price charts for months, doing hectic manual testing and then one fine day realizing that - Oh it don't work because we follow some other markets in commodities. Just to avoid this, and save time, insights from experienced traders will be really useful.

Please rest and take care of your health.

 

[vishal_k04]

dear mohan.sic, as pannet1 said if you share your trading style and the points where you are facing difficulty, it'll be helpful for us to guide you. As a basic rule of trading don't over analyze as too much analysis always leads to confusion. make the chart as simple as possible. here's nymex crude chart which i'm using for swing trading.

I strictly follow one setup consistently without any second thought and always remember no setup is 100% profitable. problem with new traders is, if 2-3 trades goes wrong, they start searching for new strategies. if i missed something, do let me know.

 

[pannet1]

Not able to understand what you are trying to explain. Really no. And I expected a trade example.
if MCX Crude was moving before US Oil, then no one will look at it for trade right. Do you get it now ?
Trade example ... hmm ... just open the both the charts and see how much points did each one move.

So you just began and trying to learn like me. Then I think both of us should learn from some experienced trader here.
my learning period is over. good luck for your learning.

what difference does the question make ? when you say USD, for us it obviously means usd against inr in Indian context when we are discussing US market ( usd ) to MCX ( inr ).Right ?
the whole discussion if about looking throughout the world for clues on the direction in which MCX Crude will move in the future (from 1 minute onwards). right. So it is in that aspect we are gauging the USD in a market place in which its highly traded (EUR, GBP and JPY). USDINR movement is very small and we are not considering that for this particular sentence.

I thought you have some method for gauging supply/demand of crude. Its okay.
i already told my method, nothing more nothing less. either you trade fundamentally or technically. There is no other way. So if you are looking for a non technical way then I am not qualified to talk about it.


I never traded commodities. I am not a trader yet in this segment. I know some basics like inventory data, exchange rate impact and so on. But as a trader I know that, theory is theory and practical trading exp is different and genuine answers from real traders can cut short our leaning curve.
In this case, Instead of starting from basics, following mcx price charts for months, doing hectic manual testing and then one fine day realizing that - Oh it don't work because we follow some other markets in commodities. Just to avoid this, and save time, insights from experienced traders will be really useful.

inspite of the disparities for a system trader, backtesting is the only way. If your sample set is big, then it will average out all the disparities.

just my 1 rupee

pannet pannet pannet
Please rest and take care of your health.

 

[mohan.sic]

dear mohan.sic, as pannet1 said if you share your trading style and the points where you are facing difficulty, it'll be helpful for us to guide you. As a basic rule of trading don't over analyze as too much analysis always leads to confusion. make the chart as simple as possible. here's nymex crude chart which i'm using for swing trading.

View attachment 34332


I strictly follow one setup consistently without any second thought and always remember no setup is 100% profitable. problem with new traders is, if 2-3 trades goes wrong, they start searching for new strategies. if i missed something, do let me know.

Hi vishal,

In-fact I have shared my trading style in the fist post to you . Though not in detail, but yes I have given the outline. You may look at it where I said I am a volume based pattern trader and TA ( volumes related )

I will summarize for you here:

1) Does MCX follow Nymex prices
2) Does price discovery happen in MCX or Nymex

I have posted above points. One may think that both the above questions are identical as they are pointing towards same information. But it makes a difference for different types of traders.

( Lets us ignore USD and other factors to avoid complexity. Hence ideally both Nymex and MCX price charts should be identical with a little lag or lead. ) Right ?

1)For a chartist, who follows breakouts, supports, or any price pattern - Ideally it wont make a big difference to this trader in trade decision making as both Nymex and MCX charts will be identical. If there is a higher high in Nymex chart, the same higher high will appear in mcx chart OR If there is a Moving average cross over in Nymex charts, most probably we will see the same cross over in mcx chart with a little lead or lag.
Here the trader is looking at the price movement to predict upcoming move. And price movement will be almost identical ( or with little differences ) between both exchanges.
So the trader is at liberty to follow Nymex charts and trade in MCX OR use MCX charts and trade in MCX.

2) But Take an example of a tape reader. Or a volume reader who tries to predict the market based on volumes and spreads, or a trader who trades on sentiment readings like upticks and downticks. These traders don't rely on price patterns. in decision making. They look at different dynamics which stands unique to each market. It is important for these traders to understand where the price discovery actually happens. Why ?
Because the order book and sentiment readings between Nymex and MCX wont be identical like the charts.
So for such traders, it is important to understand the market of price discovery as it is not meaningful to look at mcx order book if the price is actually influenced by nymex order book.

So my question is not merely to understand which leads and which lags. No correlation is constant.
My attempt is to understand the market place where actually price direction is broadly influenced.
I know it not possible to give a straight answer on this. Please share your trading experience and
i will infer from that.

thanks.

 

[vishal_k04]

mohan.sic bro, i may not be the right person to answer your query as i've never tried volume based trading, i prefer price action based trading in intraday. volume based trading is more suitable for equity segment as it is pure indian market trading but when it comes to commodity segment all goes in vain bcoz there comes the USD/INR factor which cannot be ignored. lets take an example, nymex is going down, then theoretically mcx should also go down but if USD is going up then despite of high seller volume, mcx will not show similar action.
here's a chart of crudeoil dated 18/3/19. nymex didn't broke 15th march low but its broken in mcx, and look at the volume bars. Then how an intraday trader take decision only on volume chart.
do correct me if i'm wrong. experts please throw some light on it, i'll also learn something new.