Can anyone give advice on the following? it’s driving me a bit mad
I entered oil long at the beginning of June at $36 And the price climbed to $40 after the 6th June OPEC meeting and then the oil price dropped quite suddenly.
I stayed in the trade thinking it was just normal volatility and that I should take a long term view and keep my trade open (my mistake). The price then continued to drop eventually reaching $35. At this point I got scared and decided to place sell orders to equalise my buy orders and have a steady floating loss. I placed the sells as I read an article saying that if the price fell below $36.07 It’s on it’s way down. My mistake was jumping the gun too soon and not waiting for a sustained price action below €36.07.
Over the next few days prices then climbed but I didn’t close my sell orders (I really do not know why). As my long entries got to breakeven I closed them. My sells were losing a lot and still are losing a lot now.
I’ve read a lot of analysis saying that the markets could range but I really do not know. I am hoping they do range and come back down.
Do I realise my loss or should I wait for a reversal / ranging market to minimise my losses? I feel like the price can come down but I don’t know.
I’ve just placed a buy order to stop the bleeding from my sells and now have a steady floating loss again (the number is making me feel sick). This is all super messy now and I really do not know what to do.
There is a part of me that would be happier to stay in this state of floating loss purgatory rather than closing out and completely realising the loss.
If you can give any advice it would be greatly appreciated.
Won’t kick someone when they’re down- we all make mistakes so best thing you can do is cut your losses before they compound and move on. If you’re serious about trading, realize that you have the rest of your life to make this money back, smartly- not from a place of greed, but from a place of learning from prior mistakes and not repeating them going forward.
Oil is breaking out right now, but, it is bumping up against a long term inflection zone between 40-42.
You can look to the options market to get a sense of how traders are pricing in volatility.
USO is a good proxy (highest traded oil ETF) - and right now, options traders are pricing in roughly a 13% - 1 std dev - move (in either direction - volatility is directionless) over the next 30 days or so.
You can extrapolate that out to the broader crude market and use that as a guide for volatility analysis- layered on top of price action.
Personally, I’d say that after the run up from the Apr lows, there is likely to be some profit taking and re-assessment. You may see price drift sideways to slightly lower. Or, they could just continue the breakout and squeeze anyone who is short.
If you do see a pull back, a good place to get out would be the 20EMA which is currently around 37.
Thank you for the advice I appreciate it.
For now, I am locked in with this floating loss because of my trades in opposing directions.
I think if the market breaks out above I will realise the loss.
I don’t really understand the point you make about pricing in the volatility. Are you trying to say that the 13% is a measure of volatility and the likely amount the price could go down (or indeed up)??
It’s not what you want to hear but the position needs to be closed immediately.
Yes there is a good chance it will then go the direction you want - but the damage to your psyche (not too mention your capital) is clearly causing problems
You need to cease being wrong - no ifs or buts. Stop searching for news that validates your opinion.
In situations like this you can just keep compounding the problem.
Time to bite the bullet and live another day
We have all done this - it’s part of the learning curve and likely you’ll never do it again.
Exactly. Volatility is a directionless metric of market movement(s). Equity traders often look to the derivatives markets (e.g. options) to get a sense of implied moves. While implied volatility commonly overstates the actual underlying move you can still get a read on the implications for price action over the next x trading days.
I have my suspended floating loss due to my trades on opposing sides. I am in this purgatory at the moment.
I am considering leaving this floating loss running for the time being and over the course of the next few months closing out the loss slowly which will soften the blow rather than completely closing out now which will really impact me badly in the immediate.
I have other incomes, a small business and I am due to start a new job. If I portion up this loss and close it out over the next few months as I make money elsewhere it will be easier for me.
Any thoughts? It’s a big bullet to bite right now and I have taken some comfort in knowing it won’t get bigger.
Exactly, John! Closing the trade will be the lowest point of emotion. As the day goes on, you’ll accept that you did the right thing and start the healing process. True professionals own up to their mistakes and move on with the hopes of not repeating them, or, at least not to the same extent.
Update - I had four individual trades and all of them were hammering money.
I have closed one of them and realised that loss. Not sure how I feel at the moment but a bit relieved.
I have locked in the rest and will realise the loss gradually as I make money elsewhere. I do not see my self doing any meaningful trading for the time being as markets are a bit crazy at the moment with coronavirus worries and for the obvious fact that I have just been burnt in a way I really thought I was sensible enough to avoid.
It all started so well in Feb, I was trading 0.01 - 0.03 lots, making enough money for coffee and a sandwich. I was happier then.
I decided to trade 0.4 lots as oil looked like a safe trade and here we are.
I hope someone else can take some warning from this. Avoid big risk, more so in these uncertain times where you may already be suffering a bit financially (I know I am).
I agree cut your losses and get out, commodities are not for the faint hearted, go for currency pairs.
Most of the damage to my account came from trading commodities, oil, gold, silver, copper, in my early days, all unpredictable you only need a sheikh to sneeze in the middle east and the bottom falls out of the oil market.
I do now again trade commodities, plus stock markets, dow, uk 100 and they can be very profitable if you can get it right, but the opposite is true if you get it wrong.
I feel your pain. You have had excellent logical advice from others far more experienced than me. I will try to help by asking you some questions that you only have to answer for yourself, not to post on this forum, in the hope that it will help improve your future trading.
For each of the four individual trades, what percentage of your trading portfolio did each trade risk add up to? Having four trades active at the same time, what total percentage of your portfolio did they all represent?
When you entered each trade, did you have a take profit number written down, so you could calculate the profit/loss ratio the trade represented?
When you entered each trade, did you set a stop loss immediately on each trade or did you let them float?
What would have happened if the underlying had fallen to $20/bbl? How much loss would that incur? When you placed the shorts, what would have happened if oil rose to $50 /bbl?
I ask these questions because I spent 40 years of my working life in the oil and gas industry, and I have seen $8/bbl and $140/bbl. If you can answer these questions, and you never were in danger of losing more than 10% (or 20%) from these four trades, you can sleep well at night. If you either can’t answer the questions, or the answers show that you could have lost more than 100% of your portfolio, please think about revisiting your risk/reward plan, positions sizing and total funds at risk at any one time to improve your edge. I hope this may be of use, and I hope you have exited all related trades by now.
This is very subjective advice and should be taken within that context. Because one trading vehicle did not work for your specific strategy does not directly equate to “stay away from it” for others. People should try to trade what naturally speaks to their risk tolerances and overall goals.
it might go back to 39 that is when you should close
if day candle closes over 46.258333 get out and do a double or triple of what you lost
my pov
not responsible for any loss
I’m not here to get into arguments but what is subjective, someone crashing and burning trading a commodity, I think it’s the responsibility of experienced traders to guide and advise on FX in general.
I now trade these markets with a fair degree of success these days, however that wasn’t the case, if you want to council someone to lose there bank then go ahead.
Personally I would like to think that if I can keep someone solvent and trading successfully then they become one of the 5% not the 95%.
