Crude Oil Futures Market....a few observations

Have been paper trading Oil Futures in preparation for Prop Trader account…and I have made a few observations.

Crude oil will almost never leave a consolidation pattern, without a FU move in the opposite direction of the direction which ‘they’ are intending moving the market. Sometimes, a double bluff FU move at that. i.e. an FU breakout in the correct direction, before a big reversal in the opposite direction, running every last stop out of the consolidation, perhaps suckering a few n00bs into ‘hitting the break’, before running the market right back up to the top of the consolidation, and then breaking out in earnest…and this will all be done within a 1 minute candle.

This is worse than Forex by a long shot and I don’t understand why oil is so popular an instrument to trade. The volatility and the big moves are illusory. ‘They’ have no intention of letting the small fry traders do anything other than fight for a few scraps in the consolidation patterns. The BIG moves are not for the little guys…

…I can get by trading Crude, but when I think of how much effort it is compared with other markets, I really don’t see the attraction.

Comparing crude with trading the S&P, where one can literally sit mindlessly hitting every trend following retrace back to the MAs and more often than not, get a result, and it is baffling why anyone would opt to trade crude over the equities indexes.

…why trade crude oil?

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XTIUSD (USOil) and XBRUSD (Crude) behave in a similar way… My reason for trading these two…

(For my Accounts) They both require less margin than any of the Currency Crosses and substantially less margin than the equities indexes or commodities… Both Oils are very sensitive to news and world events and as such can behave erratically, a condition I’m sure isn’t lost on the LP’s and Brokers…

Another positive with these two instruments is that they are pseudo range bound… moving (trending?) up and down between upper and lower price levels… ie: since the middle of May 2019 the price has never fluctuated above 60.5 or spiked below 50.5… and in July 2019 price has only ranged between 56 and 60.5… Unlike some of the metals and Currency pairs which have gone off for a real wild ride…

So they can be a little more predictable than most of the CFD’s available to the retail trader and give ample profit (and loss) opportunities if trading with small lots and a proven strategy.

I trade the XTIUSD using a MTF (Multi Time Frame) Strategy… I designed an Indicator after I noticed a while ago that the short term price does not like to be to far away from the longer term average price and opportunities present when the short term level spikes away form the long term level and will quickly retrace back to the latter level…

A similar methodology is deep in Dennis’s super successful Strong Weak Analysis strategy…

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I include Brent in my long-term trend-following strategy but its not a favourite target - its certainly as profitable long-term as any forex pair but the margin’s worse than the majors.

I’ve never even looked at a 1-minute chart but its not surprising if it appears to show manipulation.

I guess if u have a system that works for you, then hats off to you…

…I tend to keep things simple and use just basic indicators…also, I am prepping myself for a prop trader account trading Oil futures, 1000 barrels = 1 contract. $50K funded account. Max daily loss allowance is $1000K, Mass total draw down is $2K…So yeah…margin is HUGE, risk tolerance is very low…which is NOT good and not something I would do with my own money, but this is the rules of the prop trader firm. It is a case of proving profitable trading under their rules, or no funded account.

…yeah…the LTF charts are a nightmare, BUT because I am looking at the LTF charts, I notice the utter rigged nature of this market…on any major move, their is nothing organic about it whatsoever. It is basically ‘the house’ with perfect knowledge of where all the tiddlers are playing, cleaning them all off, followed by a great big fkn KABOOM in whatever direction they intend on sending crude.

The past few days, I have been sitting patiently looking to trade trend line breaks in Crude Oil, one short, the other long. Missed them both. Both shot right through the trend line on 1 minute candle, moving the lion share of $1 each time…this isn’t the aggregate actions of millions of buyers and sellers. This is the action of one giant, with perfect market knowledge. And this is almost always the case with crude oil futures…nearly every consolidation pattern ends up being a ‘megaphone’. Break out from any ‘honest’ consolidation tends to be untradeable…(I suppose you could just hit trade on breach of trendline, but get in habit of trading trendlines on first breach, and you won’t be in the game very long).

Crude oil has to be one of the most rigged markets that I have seen…seems very strange to me that it is so popular with retail traders.


@MatDerKater, Thats a lot of Barrels… 1000 Barrels is only AUD$171 (95 pound) margin from my Broker… So you can see it’s a lot of firepower for $171… I have 1:500 leverage but 1000 Barrels is way too big a position for me to contemplate…

This sort of price action is rife through all pairs at some stage… I’ve always said PA is malevolent and when I’m backtesting code, it can be visually seen as you watch…
You can attempt to use PA against itself by placing a BUY and a SELL at a chosen mid price point and take the profit on the spike down (small step) and profit again on the way back up…

“Short term price does not like to be to far away from the longer term average price and opportunities present when the short term level spikes away form the long term level and will quickly retrace back to the latter level…” See Below

If you have been watching the flow and you have a good idea of the character you can give it a shot on a Demo and you have lost nothing but time… Cheers.

Taken in isolation, taking trades of market structure, the way all the TA books and websites seem to teach it, is indeed a horrendous strategy and the market throws up far more candlestick patterns that end up doing the exact opposite of what they are meant to do, than it does textbook examples.

To get the textbook examples, you have to chose your levels wisely, and take into consideration what momentum indicators like MACD or Moving Averages are suggesting to you.

As far as Crude Oil goes, trading the 12 hour charts, is easy. The 12 Hour Crude Oil chart is an honest chart.

However, at a current $59K per futures contract, only those with exceedingly deep pockets (i.e. big financial institutions) can profit from this market without taking on huge amounts of leverage. For 95% of the other players in the market, they are trading the 30 minutes and lower charts. This no doubt explains why contained within those big honest textbook 12Hr bars, is an utter hookey shitfest of deceit and outright theft.

It is all very well trading mentors telling us “you have to learn to think like the financial institutions do”, but the fact is, the little guy just doesn’t have the risk tolerance to trade like financial institutions.

I’m not suggesting trading any candlestick patterns here… when the shorter TF (Green) starts the snap back to the 1 hour TF (Red) then this the signal to open a position… The 4 hour TF (White) just shows the long term direction of the market…

The 4 hour line can also be used as a filter… If the White line is in an uptrend… only go long… if the the White line is in a downtrend… only go short…

The Indicator was designed to stop flicking up and down through various TF’s and complete PA can be seen in a single chart…

Is this not a very similar idea to simply using MAs to instruct the trader which direction he should be thinking?

i.e. a 50MA on 4Hr time frame is ~ a 13MA on a 1 hr time frame, etc?

If you have a system that delivers results for you, then that is fkn awesome…

However, when I look at that, and view your trade entries, my concern would be where to put the Stop Loss…such a system may be great whilst it works…but a single blow out candle and the bucket shop not executing your Stop Limit Order, could wipe out your account…you could just say, I am prepared to lose X amount, etc etc…but I would day that the beast within the market has a knack of finding those levels that a trader is ‘happy to be stopped out at’.

This commodities and something like that are really for long term trading, I bet that BRENT will arise again to the level of almost hundred per barrel in something like for example few years and nothing less. Thanks in advance for keeping that alive.

I have tried to trade oil, but it was just a little bit heavy for me, so I gave up. I find that some conclusions about market moves cannot be with certainty drawn only from chart. I believe that it is due to reason that this market is heavy controlled by oil producers

Judging by the chart action itself, I would say that Crude Oil futures are HEAVILY controlled by institutional finance. The way in which their is ALWAYS some kind of fake out or stop run prior to every big move gives that game away.

‘They’ know where they are moving oil to, and like to shake off as many passengers as they can before they do…One of the most corrupt and rigged market charts I have seen…worse than Forex price action. (and they are all bad these days…I think trading now is harder than it has ever been in the past)…

…certainly, the guy who taught me to trade, ‘made his name’ trading the most simplistic trade setup ever. Might have worked well ‘then’, wouldn’t recommend anyone follow this setup now.

Hey @MatDerKater… The information above was posted 2 weeks ago… XTIUSD went exactly to the high shown and back down again… and you wanted to argue the point back then as well…

So while you were still bitching about it… there was money being made by a perfect setup…

61 on the 10th July and back to 55 by the 19th July… Doesn’t get much easier than that…FFS

Post your winning trade setup, as you took it, (just I have done very publicly on this forum with a handful of winning trades), or it didn’t happen.

Looking back to that $61 high…what I seen, was a ramp up to $61, then a gradual breakdown in price giving good traders lots of logical shorting opportunities, and then just prior to oil breaking down, a big FU move taking out every single last logical stop loss level, and then after 95% of the ‘passengers’ who had essentially predicted oil’s retrace were shaken out the game, oil broke down.

A similar theme occurs with practically all consolidation pattern’s in oil.

Of course, if you have a much higher risk tolerance, then you will be able to absorb these frequent FU moves, but then you are either trading with so little margin you are making peanuts on the trade, or you are rolling about one serious ball of capital to make it worth your while.

It was a simplistic move… could be seen from a passing Comet… Which bit did I get wrong??

I showed you the range and a possible move well in advance and you took no notice…

Even showed you the Indicator that I use with XTI and the move in progress… Your FU

It was just a wild guess… I took no trade and made not a zac… So, just keep on bitching


Having a bad week going into the likely but never certain Fed interest rate cut announcement?

Post a chart showing exactly what you mean, like I have done with many trades, the majority of which turned into WINNERS, or shut up.

Anyone can waffle on about a generalised pattern then pop up and claim victory when things turn out, give or take, a bit like they described…but merely ‘describing’ the market means NOTHING, unless you can identify solid entry, profit taking, and stop loss levels which aren’t run out of town before your profit levels are hit…and I put it to you, that practically everyone who wasn’t an institutional player, had their SL run out of the game prior to the break down in Crude Oil from the $61 high.

I don’t think its a problem to grap just a few pips-those big mooves are difficult to catch-if you catch some pips here and some pips there you will make your living as well

Here is a Setup for Shorting. It uses the oil market but works fine everywhere. As described below setup based on a cruel market nature.

I call it the Test_Of_RFSB. Here is a fresh example in the Brent futures market.

The first chart is telling the global view (1 candle = 1500 ticks). You can see on chart #1:

  1. the breaking down of line A.
  2. consolidation zone after break-down of A
  3. development of the Selling Wave with big bearish effort around 59.40. Plot RFSB here.

The idea behind the testing RFSB - is to knock out bears who joined the selling wave from good positions. Test means that -> the market makes back move up in order to trigger SLs of bears placed around the breakeven level. As you can see on the profile, we had a spike of activity at 59.40 level. So, point #4 - is the “test” of RFSB and knocking out sellers from a falling market.

Now, look at chart #2. This is footprint (1 candle = 144 ticks). We need to find the best moment to open a short position.

  1. Abnormal Buying during testing of RFSB on faster TF. Green Clusters = Many Existing Shorts are Stopping-Out. Market Fooled that Sellers. Thereby, it lost its interest to go further up.
  2. That is why selling pressure appears (Pure Genuine Supply). Price starts to decline amid the red Delta = bearish behavior.

A period of transition from 1 to 2 = the rational moment to enter shorts with applying your personal Capital Management Rules.

@MatDerKater, XTIUSD D1 Chart, 4 Months on and nothing has changed… still more than tradable…

Actually price action is diabolical how it has stuck to rough trendlines… including the hit on those Tankers in the Strait of Hormuz back in June helped get the price back on track… and over the last week or so price has stalled and fallen away from its normal trajectory pattern and BOOM…

An Iranian Tanker is struck with a Missile a few days ago in the Red Sea… If we didn’t know better?

Disclaimer: No, I didn’t trade these moves, just displaying the smooth volatility in the Oil Price…

Yeah, but who trades Oil Futures on the Weekly time frames? Need pretty deep pockets to play that game I would say. No, here is what most shorter time frame traders have to put with in Crude Oil:

No, I didn’t take any of these trades shown all of them based on textbook signals, but I bet loads of poor bastards did, which will be the only reason that the price fluctuated towards the SL, before reversing back to hit the target.

I am getting increasingly sharp at this sh!t, but I can tell you, that Crude oil is a dirty fkn bastard. As your weekly chart perhaps shows, the Market Makers have the market where they want to hold it, and everything else in between will just be a case of running out the largest amount of Stops possible.

Walking the tight rope. If it starts trading above 55 then 60 sooner than later i think…