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Old 10-09-2009, 12:09 PM   #1

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Trading Oil and Gold

I realized that I have a post on bonds and grains but nothing on oil or gold, so here we go.

OIL


Simple enough to understand that in today's time a lot of people are watching oil and there's a number of futures contracts to trade here.

Characteristics of the oil markets:
  • Variety of times to trade based on where you are at - can get a jumpstart on your trading day before the indexes even open
  • Can be uncorrelated to the indexes
  • 3 possible contracts to trade
  • When in play, oil will move
There's 3 contracts that I trade and watch:Note - your broker may have different symbols, I am going off my OEC charts.

As always, perform your own due diligence before trading here. Pull up a few charts and see if you like what you see.

IMPORTANT: Every Wed @ 10:30AM EST is the oil inventory report. DO NOT HOLD TRADES INTO THIS OR EXECUTE TRADES INTO THIS REPORT UNTIL YOU HAVE EXPERIENCE. Econoday has this listed as "EIA Petroleum Status Report''. I have my gmail calendar setup with a reminder every Wed to trigger at 10:20AM to exit all positions soon if I am in one. Forget this one time and you could pay dearly.


GOLD

Gold is actually very similar to oil so that's why I'm including here. This is also a hot topic lately and there is 1 main futures contract that I will trade here.

Characteristics of gold:
  • Variety of times to trade based on where you are at - can get a jumpstart on your trading day before the indexes even open
  • Uncorrelated to the indexes
  • When in play, gold will move
Contracts to trade:
  • GGC - this is the contract I trade as there is good volume here.
  • Mini-Gold - for whatever reason, this has never attracted volume so I wouldn't touch this thing.


As you can see, there are some similarities between oil and gold but they are 2 different markets that could compliment your trading.

Last edited by brownsfan019; 10-27-2009 at 08:28 AM.
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Old 10-09-2009, 06:19 PM   #2

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Re: Trading Oil and Gold

Hi Brownsfan

Just a question about correlation. Isn't Gold correlated to the $USD :

[IMG]http://stockcharts.com/h-sc/ui?s=$GO...81&a=180295700[/IMG]

Also oil has physical value related to supply/ demand pressures. I see sales figures and inventories , but I do not see this with Gold , albeit they both are commodities.

erie
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Old 10-10-2009, 01:31 PM   #3

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Re: Trading Oil and Gold

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Originally Posted by erierambler »

Just a question about correlation. Isn't Gold correlated to the $USD :

erie
Hi Erie,

See my post with Gold/USD chart.
http://www.traderslaboratory.com/for...kout-6909.html

Regards,
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Old 10-10-2009, 05:30 PM   #4

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Re: Trading Oil and Gold

Quote:
Originally Posted by erierambler »
Hi Brownsfan

Just a question about correlation. Isn't Gold correlated to the $USD :

[IMG]$GOLD:$USD - SharpCharts Workbench : StockCharts.com[/IMG]

Also oil has physical value related to supply/ demand pressures. I see sales figures and inventories , but I do not see this with Gold , albeit they both are commodities.

erie
erie - the correlation I am referring to is the US indexes, which is what I noted. Since many trade the indexes, I am trying to point out a few markets that are not directly correlated to them. Are there times where things will be in correlation? Sure, of course. There was a time when oil moved up and the indexes moved down. It was almost perfect correlation, but that time has come and gone. Speaking in general day-trading terms, gold and oil do not have a correlation to the US indexes consistently.
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Old 10-10-2009, 06:29 PM   #5

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Re: Trading Oil and Gold

the correlation I am referring to is the US indexes

thanks for replying brownsfan, now I understand.

erie
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Old 10-10-2009, 06:32 PM   #6

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Re: Trading Oil and Gold

Quote:
Originally Posted by suriNotes »
Hi Erie,

See my post with Gold/USD chart.
http://www.traderslaboratory.com/for...kout-6909.html

Regards,
Suri
Yes , I find that interesting .

erie
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Old 10-26-2009, 04:48 PM   #7

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Re: Trading Oil and Gold

Quote:
Originally Posted by brownsfan019 »
There was a time when oil moved up and the indexes moved down. It was almost perfect correlation, but that time has come and gone. Speaking in general day-trading terms, gold and oil do not have a correlation to the US indexes consistently.
Well it remains to be seen, but during 2009 the correlation between oil and indices has been quite outspoken. This does not mean that when equities move up 10%, oil moves up the same amount each time, nor does it imply that if you superimpose both charts you see identical patterns. Correlation needs to be analyzed, and I doubt you can just say "that time has come and gone".

Here's an interesting article about the remarkable correlation between oil & equities. It's as recent as from August:

FACTBOX: Oil, equities trade at their closest in decades | Reuters
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Old 10-26-2009, 05:12 PM   #8

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Re: Trading Oil and Gold

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Originally Posted by firewalker »
Well it remains to be seen, but during 2009 the correlation between oil and indices has been quite outspoken. This does not mean that when equities move up 10%, oil moves up the same amount each time, nor does it imply that if you superimpose both charts you see identical patterns. Correlation needs to be analyzed, and I doubt you can just say "that time has come and gone".

Here's an interesting article about the remarkable correlation between oil & equities. It's as recent as from August:

FACTBOX: Oil, equities trade at their closest in decades | Reuters
Nice article FW. Personally, I haven't seen it on intraday charts in the AM session, which is what I trade. Not debating what the article is saying, but for my personal trading on an intraday AM basis, I haven't seen like a few years back.
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