I typically like to trade in the mornings. That is often where most of the days action is. Often the opening range that occurs in the first 30 min or so is not broken out of for hours following. Today this was certainly the case. It took 1.5 hours to break out of the range created in the first 30 minutes. This is a concept that is excellent to know and be aware of as a trader in the live oil trading room.
Take a look at the chart below and see the trade off the open range that resulted in and 8 bar excursion into the zone. After tagging the zone, I typically do not want to fire another trade into the (supply and demand) zone (not shown). This one technique can really help your trading and keep you fro firing trades into low probability situations. Let's take a look:
So once the zone is tagged, I will generally wait for it to go through and cycle again before trading lower. This keeps me on the sidelines.
Later the market cycled up and broke out of the opening range mentioned above. Note that the second leg that occurred at about 8:46 AM on the chart was a short leg. I had actually gone long into this pattern as it met the top quality characteristics for a good trade and was with trend (read the rules page and other blog articles for more on that). The short leg that concluded at about 8:46 failed to extend to a similar length of the previous leg (shown in magenta lines). This was also occurring at S1. Then, the next let actually took out the 8:39 low in one run (all red bars). This of course is bearish. It does not mean it will not continue higher, it is just not as high quality a trade if you decide to go long again. So, if you do, you will want to keep your risk tighter.
These subtle forms of analysis are ways Oil Trading Room traders learn to analyze the market so it is a really good idea to get some of these concepts under your belt. And if not clear, you can always ask. There are hundreds of these kinds of subtle lessons and you will want to be in the room for the first hour or so to fully benefit from this level of learning.
The room runs daily during pit session hours and I will be available either via audio or chat for the first couple hours.
See you tomorrow- bright and early!
By the way, if you would like to write an article for this blog, let us know. Create a sense of community, be a leader and share your observations!
That's all for now.....