Wednesday, March 28, 2007

Cancelled Crude Signal

While ER2 keeps chugging along, CL issued a very weak sell signal evidenced by the bounce off the 34 ema(mean reversion).

If I had taken the original signal on Monday I would have taken my profit at the 34 ema and put my stop at break even for the remaining half.

Tuesday, March 27, 2007

Short Crude around $63

I missed this signal from yesterday. Crude is still short around $63. The closer to 63 you can short, the better profit when it comes back down to the mean.

Monday, March 26, 2007

ER2 finally breaks down

well it took more than 3 days of nowhere but ER2 is finally dropping off into a very profitable trade.  

haven't seen anything else to trade today yet.

Thursday, March 22, 2007

Short ER2

I think its probably best to wait for the US session, but my system is calling short on the ER2 on the 30 minute time frame.

The ideal short setup is to short the 1/8ths octave once the US session has begun. This would give you an auto profit once the market returns to its overnight range and, if the signal is predictive, a very cushy reversion- to- the- mean profit.

Pound stopped by the Fed.

For some reason the Pound is always the best or worst performer for a systems trader. When I first began trading this system 2 years ago, the pound could do no wrong. Now its a real laggard in my trading performance.

Monday, March 19, 2007

crude gaps to mean reversion

as mentioned on Sunday, the market wasn't clearly signalling a buy, but buy it went...

I don't even bother checking the news as to reasons. I like the crude market because the news is interesting but you need not know anything about it to trade it. Its all fear and greed in binary fashion. Buy if you are afraid its going up, sell if you are afraid its going down.

Sunday, March 18, 2007

CL-Crude Light sometimes more crude than expected

Is this a legit signal? We will know on Monday...

I like the idea of trading Crude Oil as a contrarian as there is so much emotion in the futures market. Oil seems the most relevant commodity to the entire planet. Whether you ride the bus or buy a book from a store, the price of oil will directly affect the price you pay.

That's as good as any reason to chart Oil.

sweetest reversion last week

 I don't actually trade the ER2 yet, but if there are many more trades like this one last week, I should definetly look into a futures account.

a few words about the system

perhaps its because I've been trading this system for more than 2 years, but I have a hard time explaining the system in simple terms. honestly though, its a system I threw together in a daydreamiy haze after a week of choppy really high volatility in the markets and I was tired of the more common cliche "the trend is your friend."


The system is comprised of a few readymade indicators modified to suit my "bottom-picking" style of trading:

JRSX (14)/SMA (20)--used for momentum
Murrey Math Lines (with historical view) used for stops and targets
EMA with Fibonacci Bands (34) used for extreme readings signalling entries

I have found that when all of these indicators are in sync, the markets tend to be at exhaustion points and more than 50% of the time, markets revert to some form median pricing.

I like to refer to it as a reversal. A MEAN REVERSAL.

trading reversals

there's a really old cliche "if you go picking bottoms, you get stuck with stinky fingers." Maybe it's true, maybe it's not. I want to document a few months of trading my favorite mean reversion system and see just how stinky bottoms can be.

too bad there's no cliche for "tops" =)