VEGAS TRADES GOLD IMAGE

VEGAS TRADES GOLD IMAGE

Monday, September 30, 2013

THE DATA HAS NO AGENDA, PART II



 
                                     The Real World At Work

I want to quickly go over some of the major reasons why the WTI Crude Oil CFD is a great instrument to trade besides the fact that the probability for profit is off the charts using the long term –vegas Big Bang Algorithm.

PROS

1)      Energy is an international asset class that the world depends on to run efficiently. Think of this CFD as the energy currency priced in dollars and cents.
2)      Unlike currency pairs that trade 24/5, and can move at any moment, the WTI Crude CFD, the vast majority of the time, will move 99% of the time during the European & U.S. trading sessions respectively. This trading window is from approximately Midnight – 1:00 A.M. [Chicago time] to about 2:00 P.M. – 3:00 P.M. [Chicago time]. Unless the market is news driven, the Asian session is most often very quiet.
3)      1 CFD = 100 barrels. While the futures contract is for 1,000 barrels per contract, the CFD offers much better flexibility in structuring positions throughout the week. If your account has less than $50K in it, this added flexibility is a great advantage.
4)      At rollover of each trading day, there is no swap fee for either long or short positions.
5)      The CFD does not expire like a futures contract.
6)      The ability to “hedge” positions at strategically important trade signals. This cannot be done with futures contracts.
7)      No commissions.

CONS

1)      Fixed margin of $500 per 1 CFD. Ideally, I wish I had greater leverage limits, but overall this is not that big of a liability. For some people this is probably a big asset, as it prevents over-leveraging and getting into big trouble should they ignore the algorithm signals [Gee, that never happens, right?].
2)      Spread of 5 pips. Ideally this would be at about 3 pips, but when you weigh all the positives, plus an offshore debit card, this is still a great deal.

Just for the record, and so everybody knows, trading hours are [Forex-Metal server time] Mon 00:00 – Friday 20:45; break at 21:15 – 22:00 Mon – Thursday; CME front month WTI delivery day [From the CME website: Trading in the current delivery month shall cease on the third business day prior to the twenty-fifth calendar day of the month preceding the delivery month.] close @ 19:30.

So, on the 3rd trading day prior to the 25th of each month, the CFD will close at 19:30 [instead of 21:15] on that day.

One of the big advantages of the long term algo is that we don’t have to adjust each trading day to the horizontal line and the necessary buffer of 30 pips. [With the weekly algo we use 35 pips just once.] Over the course of a week [5 days], this amounts to 150 pips. When markets are volatile [150+ pips from open to high or low of the day] this isn’t a problem. But take away a day or two or three of intraday volatility during the week, and now you start to have problems.

As the data proves in the WTI CFD, we do not have these problems with the weekly data. Our focus changes from daily profits to weekly profits. Target a fixed profit amount [e.g., 200 pips, or 250 pips, etc.] and then quit for the week, or follow the signals AND strategy suggestions for the entire week; it’s really up to you as you consider how much time you have and what your risk profile is.

The data proves this market will move during the week, and has done this consistently FOR YEARS to give us the necessary volatility that the daily algo can miss.

No matter what your risk profile is, or your profit objectives are, the WTI CFD can get you the kind of consistent weekly profits you are looking for; far easier than most currency pairs.

Over the next couple of posts I will be going over multiple strategy scenarios as well as some of the special rules the weekly algo requires.

Have a great day everyone.

-vegas

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