Oil Update & The Unfair Advantage

10:38 PM

Hi all,

I am at heart and by training and circumstances am a technical analyst.

     - When i first picked up trading, this was what i learnt,
- for the first few years of trading this is what i used,
       - most books that i have read preach technicals
- when i was working part-time for a fund, it was based on technicals.

 Credits: https://www.colourbox.com/image/young-man-showing-poker-cards-image-4253145

In trying to find a way to trade oil, i ultimately found out the technicals did not hold in certain periods (e.g. Jan - Mid Feb 2016).

The recent Trump victory scenario is one period where technicals and fundamentals did not apply and some traders lost money (including myself). Yet as eToro traders we have one thing that gives us an advantage over all hedge funds and mutual funds out there.

The ability to walk away and not play the game.

I liken this to playing poker, if we have a bad hand instead of folding or staying or whatever, we can just walk away. If you are a large fund manager, it is difficult to liquidate large positions without adversely affecting your portfolio, transaction costs, move the market, scare your brokers, not to mention regulations and things like that.

But for us, if we have a bad hand, we walk. We do not need to keep positions open, nor do we need to have capital invested at all times.

We do not have a liquidity problem or have issues entering or exiting the market.

Many of you know i was thinking of entering the oil trade, but i have decided not to. The OPEC meeting looking back at the past few months is nothing better than a coin flip with reasons no more compelling than the last. So while my thesis holds true, and i believe in it, without having someone who specialises in oil giving this a review i will not pretend to fully understand all the powers at work. 

Maybe next week once speculation has died down. But in the meantime, I am walking away from the poker table.


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