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VEGAS CRUDE OIL TRADER©

V. 1.2 BY VEGAS FEBRUARY 25, 2012

© This document is protected under copyright, and no reproduction either in part or in whole is allowed without the express written consent of the author.

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TABLE OF CONTENTS INTRODUCTION PAGE 5

CHAPTER 1: HOW DO WE TRADE CRUDE OIL? PAGE 6 CFD’s ……………………………………………... ………PAGE 6 CHAPTER 2: WHAT THE INDICATORS MEAN PAGE 8 THE DARK GOLDENROD LINE ………………………PAGE 9 THE PLUM LINE ………………………………………...PAGE 10 THE YELLOW LINE …………………………………….PAGE 10 THE AQUA LINES ……………………………………….PAGE 11 THE FOUR [4] RISK MODELS …………………PAGE 11 THE WHITE DOTTED CURVES ……………………….PAGE 13 CHAPTER 3: TRADING SIGNALS PAGE 14 ALGORITHM INSTRUCTIONS STEP 1 ………………PAGE 14 ALGORITHM INSTRUCTIONS STEP 2 ………………PAGE 17 CHAPTER 4: OTHER CONSIDERATIONS PAGE 21 PLAYING THE DAILY RANGE ………………………..PAGE 21 FRIDAY TRADING ………………………………………PAGE 22 THE USOIL “FINGERPRINT” …………………………PAGE 22 REVERSAL DAYS ……………………………………….PAGE 22 CHAPTER 5: CONCLUSION PAGE 22 FOLLOWING SINGALS ………………………………...PAGE 22 HOW MUCH PROFIT …………………………………...PAGE 22 APPENDIX I: Crude Oil Daily Volatility, October 2011 – February 2012. [HotForex Bid High and Bid Low] APPENDIX II: INSTALL & SETUP OF MT4 AND ALGORITHM APPENDIX III: QUICK REFERENCE BUY/SELL SIGNALS GUIDE APPENDIX IV: FRIDAY 1 HR TRADING CHARTS END OF DOCUMENT

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ILLUSTRATIONS & EXAMPLES
EXAMPLES EXAMPLE 1: Buy Signal: Yellow Line Crossing OVER Dark Goldenrod 1HR USOIL EXAMPLE 2: Sell Signal: Yellow Line Crossing UNDER Dark Goldenrod line 1HR USOIL EXAMPLE 3: Buy Signal: SLOPE CHANGE Plum Line UNDER Yellow 1HR USOIL EXAMPLE 4: Short Liquidation & Long Liquidation from Aqua Line 1HR USOIL EXAMPLE 5: Exit Position on Penetration of Consecutive White Dot Count 1M USOIL EXAMPLE 6: Exit Long Position Yellow Line Crossed Under Dark Goldenrod Line 1M USOIL

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EXAMPLE 7: Exit Long Positions Market Hit Aqua Line 1M USOIL PAGE 20 EXAMPLE 8: Plum Slope Change and then Crossover Dark Goldenrod 1M USOIL

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ILLUSTRATIONS
Illustration 1: USOIL Enlarged 1 Hour Screenshot Illustration 2: USOIL Enlarged 1M Screenshot PAGE 8 PAGE 9

Illustration 3: USOIL 1HR and USOIL 1M Side-By-Side Screenshot PAGE 32 Illustration 4: 1 HOUR CANDLESTICK July 29, 2011 Illustration 5: 1 HOUR CANDLESTICK August 5, 2011 Illustration 6: 1 HOUR CANDLESTICK August 12, 2011 Illustration 7: 1 HOUR CANDLESTICK August 19, 2011 Illustration 8: 1 HOUR CANDLESTICK August 26, 2011 PAGE 34 PAGE 35 PAGE 36 PAGE 37 PAGE 38

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2011 Illustration 10: 1 HOUR CANDLESTICK September 9. 2011 Illustration 16: 1 HOUR CANDLESTICK October 21. 2012 PAGE 39 PAGE 40 PAGE 41 PAGE 42 PAGE 43 PAGE 44 PAGE 45 PAGE 46 PAGE 47 PAGE 48 PAGE 49 PAGE 50 PAGE 51 PAGE 52 PAGE 53 PAGE 54 PAGE 55 PAGE 56 PAGE 57 PAGE 58 PAGE 59 PAGE 60 PAGE 61 PAGE 62 PAGE 63 PAGE 64 4 . 2011 Illustration 25: 1 HOUR CANDLESTICK December 23. 2011 Illustration 23: 1 HOUR CANDLESTICK December 9. 2012 Illustration 29: 1 HOUR CANDLESTICK January 20. 2012 Illustration 33: 1 HOUR CANDLESTICK February 17. 2011 Illustration 21: 1 HOUR CANDLESTICK November 25. 2012 Illustration 34: 1 HOUR CANDLESTICK February 24. 2011 Illustration 26: 1 HOUR CANDLESTICK December 30.ILLUSTRATIONS & EXAMPLES (CONT.) Illustration 9: 1 HOUR CANDLESTICK September 2. 2011 Illustration 12: 1 HOUR CANDLESTICK September 23. 2011 Illustration 13: 1 HOUR CANDLESTICK September 30. 2012 Illustration 31: 1 HOUR CANDLESTICK February 3. 2011 Illustration 18: 1 HOUR CANDLESTICK November 4. 2011 Illustration 14: 1 HOUR CANDLESTICK October 7. 2011 Illustration 27: 1 HOUR CANDLESTICK January 6. 2012 Illustration 28: 1 HOUR CANDLESTICK January 13. 2011 Illustration 20: 1 HOUR CANDLESTICK November 18. 2011 Illustration 19: 1 HOUR CANDLESTICK November 11. 2011 Illustration 17: 1 HOUR CANDLESTICK October 28. 2011 Illustration 22: 1 HOUR CANDLESTICK December 2. 2011 Illustration 24: 1 HOUR CANDLESTICK December 16. 2012 Illustration 32: 1 HOUR CANDLESTICK February 10. 2012 Illustration 30: 1 HOUR CANDLESTICK January 27. 2011 Illustration 11: 1 HOUR CANDLESTICK September 16. 2011 Illustration 15: 1 HOUR CANDLESTICK October 14.

In Q4 of 2011. Crude oil has had daily ranges consistently above 1.INTRODUCTION All markets have different personalities and volatilities but many things remain constant throughout markets. You can expect wide intra day swings that save you from a single losing trade. Every day has its own technical signals and rules to deal with and follow. average daily ranges were approximately 2. 1. Intra day volatility expands and we get some very nice moves that make your hair stand on end. In other words. This algorithm incorporates a “floor trader” mentality.83% based on $100 per barrel oil. its current 20 day rolling moving average as of February 24. At gold’s current value of approximately $1. This algorithm was developed for traders. if and when gold ever exceeded 1. If. I have taken the original gold algorithm and modified it for crude oil. As you might expect. More importantly. The “Vegas Crude Oil Trader” was actually first developed for the gold market many years ago. then this algorithm isn’t for you. If you like positioning trades for a longer time frame. we trade it during the day – forget about it at night – and attack it again the next day completely ignoring the previous day. 2012 is 2% based on $100 per barrel oil. see Appendix I. [For complete tables and stats on daily volatility for crude oil. They were 3.700 per oz. 5 . as volatility increases in a market. While gold has had ranges that exceed $30 in a day.75% and stays there. things get “more crazy” and daily ranges expand. this is the basic algorithm I would use.. October 2011 – February 2012. in the future.75% of its nominal value for quite some time.14% based on $90 per barrel oil. any particular small loss on a trade can be offset with other profitable trades simply because the market is so volatile.75% [or higher] daily volatility [based on its nominal value] on a 20 day rolling moving average of the daily range. volatility makes you money.] This makes the Crude Oil CFD or futures [more on CFD’s later in the document] a perfect instrument for trading. and never have come even close to $30 on a 20 day rolling moving average.75% would imply daily ranges of a minimum of $ 30. they are few and far between these days. While crude oil volatility has dropped somewhat in sympathy with other markets lately[most notably gold and Dow 30]. “Crude Oil Daily Volatility. gold does exceed 1.

and at the same time can see a verifiable track record of the algorithm results. You don’t need to read anything but this document in order to trade crude oil. Today. I’m doing this for 3 reasons: 1) to help those traders that need and want a solid algorithm to make money on their own. 6 .com/managerdetails/?l=58974123512456235450421&usermode=0 By having the algorithm. and 3) to give the trading public and my PAMM clients the ability to see the what. A 1 lot in crude oil [the minimum] represents 1. it is popularly called “Spread Betting”. So. don’t know how I trade. CHAPTER 1: HOW DO WE TRADE CRUDE OIL? There are only two practical ways to trade crude oil.I have intentionally written this document under the assumption you have never read any of my work. In Europe and the U. The second is at ICE [Intercontinental Commodity Exchange]. and why of my trades that I do for my PAMM http://pamm. [There are other ways. The first is at the NYMEX [New York Mercantile Exchange. you will better understand the nature of my trading.when. Sweet] crude oil. there are CFD’s on just about everything that is traded electronically.K.000 for each 1 futures contract you trade in crude oil.where. 2) to raise awareness of how to trade extremely volatile markets and promote your own research.000 barrels of WTI [West Texas Intermediate Light.000 barrels of Brent [British North Sea] crude oil. CFD’S A CFD is a pure financial derivative based on an underlying asset. For a limited time. new traders are welcomed and encouraged. a division of the Chicago Mercantile Exchange].] The first is through futures contracts. or are familiar with my trading methods. You need a futures account with at least USD $ 7. Basically it is a “bet” between you and a third party [usually a bank through a brokerage house].hotforex. I’m also making this available to the general public with no strings attached. but they are on the fringe of trading. so I’m not going to talk about them. The second [and in my opinion the best] option is through CFD’s [Contracts For Difference}. A 1 lot in crude oil [the minimum] represents 1.

NOTE: If you have issues regarding CFD trading and wish to trade the NYMEX micro crude [1 barrel per contract]. However.000. While you are free to trade either. then that is fine with me. On Friday it closes at 3:00 PM Chicago time for the weekend. the best market conditions are from 7 to 3. There are no commissions when trading a CFD. Some days. [This is a very good spread.000 barrels is about $7.06 to as much as 0. Simply find a US based broker and open a futures account. Many other brokerage houses are at 0.00 bid . if you buy 1 CFD in WTI at 108. Both WTI and Brent oil are quoted in dollars and cents per barrel. the bang for your buck can be much greater with CFD’s. Margin is USD $ 200 per each 1 CFD. mini crude [500 barrels per contract]. the deepest and most liquid market is in US WTI. Install the custom indicator “Vegas Crude Oil 1HR” and the “Vegas Crude Oil Trader” as outlined in Appendix II and use the signals to trade your futures account. The best time to trade is from about 7 AM through to 3:00 PM Chicago time.05 spread almost at all times. or full crude [1. One [1] CFD in WTI oil [as well as Brent] represents 100 barrels of oil. if the market is 108.05 offer. If you plan on making trading a career. there are no restrictions regarding time. while the margin at NYMEX for 1.00. It opens again Sunday afternoon at 5:00 PM Chicago time. So. and months things can be volatile in Asia and Europe and you are free to trade these times if you want. use the MT4 trading platform and open a demo account with any offshore broker that trades WTI as a CFD [HotForex for example]. then heed my warning about taking positions overnight [through the 2 dead hours] or over the weekend: DON’T DO IT.01 for a $0. and the house is willing to sell it to you [you are a BUYER] at One hundred eight dollars and 5 cents. You got plenty of time to make money in an 8 hour trading environment in a volatile market.000 barrels per contract] contracts offered at the CME. So. etc. HotForex maintains an even $0.000.]. Most of the time however.] The market is open for trading about 22 hours of the business day [5:00 PM through to the next day at 3:00 PM Chicago time. Don’t carry positions through the dead hours of 3 PM to 5 PM. weeks. 7 . So. the same margin in CFD’s [which would be 10] is $2. Two [2] CFD’s would represent 200 barrels of oil. the house is willing to buy it from you [you are a SELLER] at One hundred eight dollars and no cents per barrel. you would make $1.108.01 gain.08. If you so desire. and then sell it at 108. nor ever take positions home over the weekend. there are 2 CFD’s for crude oil.At HotForex. One is the US WTI Oil and the other is the UK BRENT Oil.

Chapter 2: What the Indicators Mean
I am assuming you have everything up and running and both custom algorithms, “Vegas 1HR Crude Oil Trader” and “Vegas Crude Oil Trader” are installed on the appropriate charts. If you need help, see Appendix II. When you enlarge the 1 hour, it should look something like this: Illustration 1 USOIL Enlarged 1 Hour Screenshot

There are 5 colored lines on this chart: 1 plum, 1 yellow, 1 dark goldenrod, and 2 dashed aqua. There are also white dots. The purpose of this chart is to determine which side of the market to be on for trades. I don’t personally trade directly off the 1 hour because its function is to give me the proper information for being either long or short. Every single trading day there is an easy way to make money and then there is the tough way. Do yourself a favor – trade on the easy side – life will be much more pleasant for you. Follow the signals and don’t trade by the seat of your pants.

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When you enlarge the 1M chart, it looks like this: Illustration 2 USOIL Enlarged 1M Screenshot

Just like the 1 hour candlestick, there are 5 colored lines on this chart: 1 plum, 1 yellow, 1 dark goldenrod, and 2 dashed aqua. In addition, there are the white dots which I will explain in a minute. There are different mathematical relationships intertwined in different time periods. As you will see, these relationships provide excellent trading signals. So, the 1 hour is used for direction and the 1M is used for trading the signal from the 1 hour. From the 2 illustrations above, I will now explain what each of the variables represents. Please look at and study these 2 illustrations as I guide you through the explanations.

The Dark Goldenrod Line
This line is an exponential 21 Period Moving Average [LOW ONLY] on a 1M timeframe; therefore it represents 21*1 = 21 minutes. This line is an exponential 55 Period Moving Average [LOW ONLY] on a 1 HR timeframe; therefore it represents 55*1 = 55 hours. This line represents, at every given point of time, what Big Money is doing. Trust me everyone, you want to be on the side of big money. When they are buying, you had better be long, and when they are selling, you had better be short.

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What matters here is NOT what prices are doing relative to this line. What matters here is the SLOPE of this line. When slope is positive, it means big money is buying the market and forcing prices higher; when it is negative, it means big money is selling the market and forcing prices lower. IT IS A MEASURE OF MOMENTUM FROM THE LOWEST PRICE OF THE 1 HOUR PERIOD, AND OF THE 1 MINUTE PERIOD The 1 Hour Candlesticks give you a great snapshot of what big money is doing relative to the market at any given point in time. Of course, big money changes its collective mind; and when they do the slope will change. The key here is to be with them, and never against them; this way you are NEVER on the wrong side of a market when it explodes and prices move rapidly! In almost all cases, when a market moves quickly, the slope of the 1H will tell you which direction you can expect any surprises to be.

The Plum Line
This line is an exponential 4 Period Moving Average [HIGH ONLY] on a 1M timeframe; therefore it represents 4* 1 = 4 minutes. This line is an exponential 8 Period Moving Average [HIGH ONLY] on a 1 HR timeframe; therefore it represents 8 * 1 = 8 hours = 480 minutes. This line represents, at every given point in time, what Hot Money momentum is doing from the highest price during the period (1 hour and 1M). These are the very short-term traders looking to scalp the market for a Pip or two. As a collective group, they are the first to 1) take profits, 2) run stops, and 3) the very first hoping to capitalize on a new short or intermediate trend. The key here is the RELATIONSHIP this group has RELATIVE to the Big Money group. By themselves, they represent nothing; it is their relationship to Big Money that gives us the necessary clue as to where prices are headed; because when big Money PLUS Hot Money join forces and have the same slope, most of the time you are heading higher if they are positive and lower if they both are negative.

The Yellow Line
This line is an exponential 11 Period Moving Average [LOW ONLY] on a 1M timeframe; therefore it represents 11 * 1 = 11 minutes. This line is an exponential 21 Period Moving Average [LOW ONLY] on a 1 HR timeframe; therefore it represents 21 * 1 = 21 hours = 1260 minutes.

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they will be the next group of traders to take profits and exit the market. a box popped up and I had you change the “Risk Model” number to “1”? There are available to you 4 [four] Risk Models to choose. After Hot Money. can be said to have 3 states of VOLATILITY. the prevailing trend will find it hard to sustain the current momentum. it is hard to measure the affect they have on prices. In the physical world we live in. There are 4 risk models [1-4]. when its molecular activity has slowed because of cold. It is an indicator of “profit taking” or NEW money coming into the market counter to the prevailing trend. to know they are affecting momentum. 11 . and CFD’s will exhibit different levels of VOLATILITY as each trades. The AQUA dashed line is a price level. establish new positions. and in the case of larger traders maybe run some stops. Water. it is steam. These 4 models relate to the “THEORETICAL AND CURRENT VOLATILITY” of the market IN RELATION TO A SHORT TERM EXHAUSTION MOVE. By themselves and totally isolated. 1 is the least volatile and 4 the most volatile.This line represents. USDJPY is generally not as volatile as USOIL. you have VERY LIKELY reached SHORT TERM PRICE EXHAUSTION. in sufficient enough volume. therefore. For example. In the trading realm. The key here is the RELATIONSHIP this group has with the HOT Money group. it exists as ice. the REVERSAL of Big Money momentum from the lowest price of the period (1 HR and 1M) . is there more than one state for water to exist? Of course. In its most active state. when temperatures are between 32 degrees and 210 degrees Fahrenheit [or 0 degrees and 100 degrees Celsius]. therefore its threshold level for a price move exhaustion [where there is an extremely high probability the market price will stall and reverse] is NOT as high as USOIL. It can sometimes be difficult to gauge their presence. When they join forces with Hot Money. In its normal state. that if prices get there [given the current volatility in USOIL]. at any given point in time. different currency pairs [gold is considered a currency for trading purposes]. it is water. The Aqua Lines The 4 [Four] Risk Models Remember when you were first installing the “Vegas Crude Oil trader” onto the MT4 platform. above 100 degrees Celsius. They each have different volatilities.

21.8.00. Each number has a precise 0.144. the downside exhaustion point is 107. you don’t have to redo the entire algorithm. change them and take a look at where the aqua lines are in relation to the market. So.1. On the 1 HR candlestick. for example.377. If unsure.610. If USOIL is trading at 108. Simply adjust the Risk Model number from 1 – 4. 1) Vegas Crude Oil Trader [1M candlestick] Risk Model 1 = 55 Risk Model 2 = 89 Risk Model 3 = 144 Risk Model 4 = 233 Current Risk Model USOIL = 1 2) Vegas 1HR Crude Oil Trader [1HR candlestick] Risk Model 1 = 144 Risk Model 2 = 233 Risk Model 3 = 377 Risk Model 4 = 610 Current Risk Model USOIL = 2 Note: It is very easy to change the RM.34.5. exhaustion levels should be hit a few times per week..45.233.89. USOIL has the following Risk Models defined for each time period.10. 12 .55.3. if the market price is hitting the aqua lines daily.13.If you notice USOIL getting more volatile than normal [measured by an increase in the daily range]. … The relationship each number has with the next defines a famous ratio found in nature and in trading. so it isn’t going to happen every day.2.00 and the yellow line value is at 108. The following is a FIBONNACI number sequence: 1. and the yellow line value is at 107. ALL THE NUMBERS IN THE RISK MODELS ARE FIBONNACI NUMBERS.90. So.55. Remember. what do they mean? In “Vegas Crude Oil Trader”. FROM the EMA Yellow line. the upside exhaustion point is 108. then they are too low. If not. or getting less volatile [measured by a decrease in the daily trading range].618 value from the next in the relationship [after 5]. On the 1M candlestick.55. this is pure exhaustion. if USOIL is trading at 108. Risk Model 1 means the short term exhaustion point is $0. lower the RM 1 level.

if the price comes back to the “white dots” AFTER THE FORMATION OF 20 OR MORE OF THE WHITE DOTS. If you look up in the upper left-hand corner of the chart. You do not have to calculate this. 13 . especially using 1M timeframes. You can get an up-to-the-second look at where these values are during the trading day and week. Many people use this technical indicator as an entry/exit point for their trades. For example. Originally created for the precious metals markets in the late 1970’s. They simply measure momentum from a high or low [after the fact] and “step” it up/down in a parabolic form. then if the price comes back and hits the price level of this white dot. you exit [liquidate] your position. or simply Parabolic SAR”. The market is in a very hyper or active state. prices are changing rapidly and the market is exhibiting abnormal hyper activity that can’t and won’t last long. It does not represent the NORMAL course of prices hitting a SHORT TERM high or low. The major weakness of this algorithm is that you can get “chopped up” pretty badly waiting for the market to go somewhere. I do not use it for that reason. Instead. This indicator measures the NORMAL short term exhaustion of a move in the market. After prices start rising/falling the Parabolic SAR kicks in and the white dots start forming a parabola. The White Dotted Curves Those white dots that appear on your screen are from the “Parabolic Time/Price Series” developed by Welles Wilder.So. the measurement is NOT taken from the current price of USOIL. This is all I use it for and you can ignore it on your screen until it becomes appropriate to watch. all the values are there dynamically. It usually doesn’t have the hyper activity associated with the dotted Aqua lines on your screen. After a position has been initiated. In a trendless market. The Aqua line represents “SHORT TERM ACTIVE EXHAUSTION”. YOU LIQUIDATE YOUR LONG/SHORT POSITION. it is taken from the current value of the yellow line. as it is done automatically for each 1M candlestick. The Parabolic SAR has no use other than that. it is now known as “Parabolic Stop and Reverse. your losses can mount quickly. if you are long USOIL and you count the number of consecutive white dots from the most recent start of the white dots. I use it in an entirely different way. and the 1M candlestick you currently are on has a white dot below it and it happens to be the 27th consecutive white dot.

1) When the yellow line is ABOVE the Dark Goldenrod line initiate new positions from the long side only. Why? Because from a probability standpoint you aren’t going to make much if anything and probably lose on the trade. USA time. USA time to 3:00 PM Chicago. DO NOT INITIATE ANY NEW OPEN POSITIONS AFTER APPROXIMATELY 2:00 PM Chicago. at the timeframe of the shaded blue box and at the red arrow. When you get a sell signal on the 1M candlestick. 14 . Some days and weeks it is active. Trading in Asia or Europe is your call.Chapter 3: Trading Signals Trade the “Vegas Crude Oil Trader” from approximately 7:00 AM Chicago. Use your own discretion ALGORITHM INSTRUCTIONS Step 1 The 1 Hour candlestick determines whether we go long [buy] or short [sell]. but it can also be very dull and listless. you would then only initiate long USOIL positions. Example 1 Buy Signal: Yellow Line Crossing OVER Dark Goldenrod 1HR USOIL In example 1. USA time. you would ignore it.

liquidate all short positions [if any] and now trade from the long side. When the slope of the line changes from negative to positive. pay very close attention to the negative slope of the plum line. When you get a buy signal on the 1M candlestick. a new 1 hour buy signal has been generated by the change in slope. 3) If the Plum line is UNDER the Yellow line on the 1 HR. Why? Because from a probability standpoint you aren’t going to make much if anything and probably lose on the trade. In other words. Example 2 Sell Signal: Yellow Line Crossing UNDER Dark Goldenrod line 1HR USOIL In example 2. in the timeframe of the shaded blue box and at the red arrow.2) When the yellow line is UNDER the Dark Goldenrod line initiate new positions from the short side only. you would then only initiate short USOIL positions. you would ignore it. 15 .

and the slope changes from negative to positive If you had any short positions in the market. If it hits the lower aqua line. Now. 16 . you would liquidate. 4) When the market price hits either of the aqua lines in the 1 hour candlestick. liquidate all short positions [if any]. If it hits the upper aqua line. focus your attention on the first blue shaded box on the left. If the aqua lines are hit on the 1 hour. liquidate all long positions [if any]. it is an indication of short term exhaustion in the move. a buy signal is generated and we look to trade from the long side of the market when we get the appropriate signal from the 1M candlestick. it generates a liquidation signal. The plum line is under the yellow line on the 1HR.Example 3 Buy Signal: SLOPE CHANGE Plum Line UNDER Yellow 1HR USOIL In example 3.

ON THE 1M USOIL CANDLESTICK CHART 1) When on the 1M when the yellow line CROSSES the Dark Goldenrod line it creates a buy/sell signal to open a position. This can lead to account destruction. Remember. and I instantly know what to look for in a trade. When it crosses going up. ALGORITHM INSTRUCTIONS Step 2 By looking at the 1 hour candlestick. obviously you would get long. within a short time frame. you would get short. 17 . we are not trading both sides of the market. we now instantly know which side of the market to trade. both aqua lines were hit.Example 4 Short Liquidation & Long Liquidation from Aqua Line 1HR USOIL In example 4. This is why I have the 2 charts side-by-side on the trading platform. Now. The 1 hour chart will tell us which trade [long/short] to make. it is there visually for me. we turn our attention to the 1M candlestick chart for trading signals and trade initiation. and when it crosses going down. I don’t have to guess or wonder what to do.

Stay with the long/short position until the yellow line CROSSES over the Dark goldenrod line. the only thing left is the Aqua line. liquidate your position if the white dot gets hit by the price. the Dark Goldenrod line becomes important. If it gets to 20 or more. you need to watch 3 things: A) Once you are in a position. Example 5 Exit Position on Penetration of Consecutive White Dot Count 1M USOIL 18 .] B) Keep an eye on the “White dot” count. C) If neither of the above two conditions have happened to take you out of your position. At that point LIQUIDATE your position. [Note: Please do not open a new position and reverse. it is time to exit [liquidate] your position.2) Now that a position is open. This is just to exit your open position. Any time the price touches or exceeds the Aqua line.

19 . The second boxed red arrow is the time period of the 23rd consecutive white dot that got penetrated by the price in the next candlestick. notice the white dots that started at the most recent low.In example 5. Example 6 Exit Long Position Yellow Line Crossed Under Dark Goldenrod Line 1M USOIL In example 6. Here. the 1 hour chart is bullish. The second boxed red arrow is the time period when the yellow crossed down over the dark goldenrod and gave a sell signal to get out of the position. the 1 hour is bullish. From the first red boxed arrow. the first red boxed arrow is the time when the yellow line crossed over the dark goldenrod line giving a buy signal. This was our signal to get out of the long position and take profits.

The second boxed red arrow represents the time period when the upper aqua line was hit. 3) 1M Plum line under 1M yellow line and then a slope change in the plum line from negative to positive. 20 .Example 7 Exit Long Positions Market Hit Aqua Line 1M USOIL In example 7. The first red boxed arrow represents the time period when the yellow line went over the dark goldenrod line giving a buy signal to be long. the 1 hour chart was bullish. thus giving the signal to liquidate the position. AND THEN PLUM LINE OVER 1M DARK GOLEDNROD LINE.

however. the buy signal didn’t come until the second boxed red arrow when plum crossed over the dark goldenrod line. I shouldn’t have to tell you this.Example 8 Plum Slope Change and then Crossover Dark Goldenrod 1M USOIL In example 8. will make you tremendous amounts of money 21 . the 1 HR is bullish. Chapter 4: Other Considerations You have to always use stops when trading crude oil. it’s going to put in the range for the day. and leave you in a “deer in the headlights” mode if you aren’t careful. It is a very important concept. which if you master. Somehow. Appendix III is a printable guideline for all the signals and liquidations. Playing the Daily Range No matter how you feel about the market. it’s going to happen. The first boxed red arrow is when the plum line slope changed to positive. but crude can move swiftly. someway. Take this into consideration when you trade.

price corrections should be from 30 – 40 cents before the trend resumes. The USOIL “Fingerprint” In a trending market. -vegas Saturday. Reversal Days Crude Oil is infamous for its reversal days from the U. the range is going to get “put in”. Just remember. to follow the signals from the 1M candlestick.com and I’ll try and get back with you ASAP. the questions is does crude oil fall into this pattern and are Friday’s to be avoided because of industry positioning as we go into the weekend? The answer is NO. 2012 22 . Appendix IV has every Friday 1 hour chart since the market went to a 3:00 PM [Chicago time] close on Friday. July 29.S. How Much Profit This is a decision you have to make for yourself. 2011. Since we now have basically 24/5 trading. Friday’s action can pose its own special problems and challenges. but if you can make $0. you will be presented with plenty of buy/sell opportunities. open. Please take some time and study this section.Friday Trading As many veteran traders can attest. February 25. Friday can easily be the week’s “positioning” day as we head into the weekend So.50 . Good luck trading everyone. and if you have any questions or comments. Please keep in mind that the day’s range can be “put in” in a number of different ways. The algorithm is specifically designed to catch the resumption of the trend should these correction amounts hold. I would say that is very successful trading. since the inception of electronic trading. please drop me a line at vegasxau@ymail. Chapter 5: Conclusion Following Signals It’s up to you to decide how many.$1. On an average day. and when.00 / barrel each day.

October 2011 – February 2012. [HotForex Bid High and Bid Low] 23 .APPENDIX I: Crude Oil Daily Volatility.

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26 .

***End of Appendix I*** 27 .

When it is finished.hotforex. you end up losing real money. The only difference is that the demo uses a different server [one that is linked to play money] than the real account. and also cancel orders. If you don’t play with the demo first. There is a specific reason why banks / brokerage houses have demos for their clients. more than likely you will get an update window. The only difference is that you log in with a real User ID and password that links your real money to live trading. don’t worry. You don’t have to download a different MT4 for a live account. It is an issue of familiarity. and don’t know how to do something. Install the MT4 application by double clicking the setup icon on your desktop and following the online instructions. and you can place the “setup icon” in the recycle bin. When MT4 is finished. Unless you are already trading on the MT4 trading platform. etc. with one exception. and 3) most importantly how to enter orders. widths and depth of lines. it’s easy to use and get used to. you definitely need to download the demo and play with it until you are comfortable. Please start the update and wait while it “builds” the new build version. stops. 28 . how to configure the “market watch” section so the symbols you watch are customized for you. It is to get you familiar with the trading platform so you don’t make mistakes that cost you a lot of money.. Your demo platform is 100% exactly the same as your real live trading platform. and you open it for the first time. and are familiar with its use. etc. when you get to the real platform. Don’t be stupid: this is not about how smart you are or anything like that. MT4 Install and Setup You now have MT4 setup on your computer. You need to know how to do the following:1) create a candlestick chart and modify its properties [like color of the bars. the demo and the live account use the same platform [there is NO difference]. It isn’t to see how much play money you can accumulate. an icon should be on your desktop to start the application. If you aren’t familiar with MT4.APPENDIX II: INSTALL & SETUP OF MT4 AND ALGORITHM You can download a demo version of the MT4 platform from HotForex: http://www. LISTEN TO ME FOR A MOMENT: Your real account can wait a few minutes.].com On the right side of the website page is “open demo account”.

Choose “new chart”. Over on the left hand side of the MT4 platform is the “Market Watch” section. chose “properties”. left click and depress and drag the border right until you have sized it to your satisfaction. to get the kind of space you want for news and other informational tabs. Continue right and click 2 times the + button. there is nothing but a grey area. Place the mouse anywhere on the chart and right click. Under the “colors” section do the following: make sure “bar up” is lime [it usually is default. are 3 [three] choices for type of chart: chose the middle one that has the “fat” middle”. and right click. I don’t particularly like these colors for my candlesticks. “mailbox” [where the brokerage house or bank will send you messages]. The time default is usually one hour when you create a new chart. Now you can see the “Japanese Candlestick” chart we have just created. Up top next to “Expert Advisors” on the right. change “bull candle” to lime via drop down box. “experts” [where you will be notified of successful additions of custom indicators]. When the box pops up. and “journals [where I have no idea what they load in here. A new “USOIL” chart pops up. Place the mouse on the right border until it changes into a directional arrow. on the left part of the MT4 platform. For the website archives I use different colors. Now. I’ve been trading MT4 for 5 years and never seen it used once. “account history” [where you can see trades for the month].] Most demos don’t have “news” feed activated. The chart now changes to 1 minute from 1 hour. change “bear candle” to red via drop down box. Pick “USOIL” and click. When you see up/down arrows.When you first run the MT4 application. Below that at the bottom of the page are links to “trade” [where you can see your last trade]. but if not change to lime via drop down box]. The left sections are “market watch” and ‘navigator”. If you place the mouse on “Symbol” in the “Market Watch” section. MT4 defaults to “black and white” colors for a candlestick. Leave other boxes alone. you can choose which currency pairs. change “bar down” to red via drop down box. The chart should now cover the entire grey area. Click OK. “alerts” [where the brokerage house or bank will alert you to various trade conditions]. You need to eliminate all the charts on your screen [we are going to build our own] by pressing on the “X” in the upper right corner of the chart. you immediately notice 4 [four] charts on the right. that is usually only available in your live account. and sections of information on the left. oil and stock indices [CFD’s] to highlight in the “Market Watch” section. precious metals. Drag the chart to the upper left corner of the grey area. Do this at the bottom of the page also. This is the US WTI Oil CFD. When all 4 are gone. depress and hold left mouse click and then drag to resize down to the end of the grey area. 29 . Go up top and click “M1”. Place mouse on bottom border of chart until mouse changes to directional up/down arrows. Now go to right side and do the same thing and drag chart right to the end of page [don’t obscure the prices]. Go up top to task bar and click on “file”.

Go to start>my computer> C drive.mq4 files into this directory. Drag and drop or copy and paste the *. Installing MQ4 Files You downloaded 2 *. Simply click back and forth to get the one you want to look at. Find the directory “HotForex MetaTrader” [or other brokerage house Metatrader application] and double click. If not. Repeat this process for each chart you want available on the platform. At the bottom of the charts. Installing The “Vegas Crude Oil Trader” on a Chart When your MT4 application restarts. Trading application will start up. Right now. Or.mq4 files from the link I gave you. First. Ignore the sections of the box labeled “common” and ‘visualization”. bring it up so it displays. Now close everything.Chart changes to green and red candlestick. or move them. click OK ONCE [Do not double click]. then double click “indicators” folder. 30 . to your desktop for easy install. Place the mouse over the numbered value in “Risk Model” and double click. you should see the USOIL candlestick 1 minute chart. Copy and paste these *. 4 or more charts up at the same time. 3. you will see the tags for each chart. Enter the number 1. Double click on C drive and chose “program files”. When the box pops up. It’s really up to you how you want to view them. After you enter 1 in this field. exit the MT4 trading platform. Scroll the mouse down to where you see “Vegas Crude Oil Trader” and click the mouse once. which I do second after inputs]. There default values are always used.mq4 files. I explain risk models and their values in the text. Green candles are up and red candles are down. click on the section “Inputs” [defaults to colors. You need to install these files exactly as I tell you for them to work properly. I am interested in getting the algorithm on your screen and teaching you how to do it for any chart. The last directory will show a dropdown box. Double click “experts” folder. you can resize them to have 2. The “Custom Indicator – Vegas Crude Oil Trader” box pops up. Go up top to “Insert” > “Indicators” > “Custom”. restart the MT4 application by double clicking icon on your desktop. The file path looks like this: C:\\programfiles\HotForexMetaTrader\experts\indicators\ Now.

3”. We need to do one more thing. The “Visualization” section you can ignore. In the “Style” box. When you are finished. The zero field is “Plum”. You now should have “The Vegas Crude Oil Trader” fully super-imposed over the 1M USOIL candlestick chart. in the “Maximum” box put the value “0. A drop-box shows up and you can pick the width of your white indicator [2 is good]. Now click OK. You now can select delete and indicator is gone from the chart. the 1 field is labeled “DarkGoldenrod”. MT4 defaults to the “Parameters” section.Now go to the “colors” section. [Note: To delete any indicator from a chart on MT4. and right click your mouse. I’m only concerned here with getting “The Vegas Crude Oil Trader” up and running on the MT4 chart. White dots now appear on your chart. The charting section of your trading platform should look something like this: 31 . Part of “The Vegas Crude Oil Trader” is now super-imposed on your M1 USOIL chart.] Now reposition your 2 charts so they are side-by-side on your MT4 platform. In the “Yellow” field under “Width”. place the mouse on the number you see and double click. Go up top and click “insert” > “Indicators”> and click on “Parabolic SAR. Now use the process you just learned and make another USOIL candlestick chart. the 2 field is labeled “Aqua”. A drop-box shows up and you can pick the width of your yellow indicator [2 is good]. Do the same for “DarkGoldenrod” [pick 2 width]. the 4 field is labeled “Yellow”. place the mouse on the number you see and double click. Only this time it is going to be a 1 Hour candlestick. click OK once.03”. What they mean is covered in the main text. For “Aqua” fields leave width alone and double click mouse over number under “style” [Dashed line 2 is good]. The “Parabolic SAR” box pops up. In the “Plum” field under “Width”. use the drop-down box and choose “White”. and in the line box to the right of the “Style” box use the drop-down box and chose the 3rd [third] line thickness. There are 5 fields labeled 0 to 4. simply place the mouse on any part of the indicator so that your screen reads a small box with indicator information. the 3 field Is labeled “Aqua”. In the “Step” box put the value “0. On this chart place the custom indicator “Vegas 1HR Crude Oil Trader”.

*** End Appendix II *** 32 .Illustration 3 USOIL 1HR and USOIL 1M Side-By-Side Screenshot You have the 1 hour chart on the left and the 1M chart on the right.

If in “sell mode” we only make new short positions. 2) Plum line under yellow line and then a slope change in the plum line from negative to positive. 5) Any other time you want to “ring the register” on a profit. STEP 3 Liquidating long positions: 1) When yellow line on 1 minute crosses under dark goldenrod line. you will not only profit handsomely. 10) Any other time you want to “ring the register” on a profit. If you can do that. Selling of the 1M when 1HR is in “sell mode”: Only when the yellow line is under dark goldenrod line on the 1M. ***End of Appendix III*** 33 . 2) When upper aqua line is hit. Liquidating short positions: 6) When yellow line on 1 minute crosses over dark goldenrod line. Your profit goal should be 30% . but you are a great trader. 8) When 20th [or more] consecutive white dot is taken out on downside.40% of the days range. AND THEN PLUM LINE OVER DARK GOLEDNROD LINE. Buy Mode: 1) yellow line over dark goldenrod line on 1 HR. 4) When you approach the 20 day rolling moving average on the day on the upside. 2) plum line under yellow line on the 1 HR. 7) When lower aqua line is hit.. STEP 2 Buying off the 1M when 1HR is in “buy mode”: 1) Yellow line over the dark goldenrod line. and then a slope change from negative to positive of the plum line. either in 1 minute or 1 hour. either in 1 minute or 1 hour.APPENDIX III: QUICK REFERENCE BUY/SELL SIGNALS GUIDE STEP 1 Determine “buy mode” or “sell mode” from 1HR candlestick chart. 9) When you approach the 20 day rolling moving average on the day on the downside. 3) When 20th [or more] consecutive white dot is taken out on upside. or better. If in “buy mode” we only make new long positions. Sell Mode: Only when the yellow line is under dark goldenrod line on the 1HR.

2011 Grid: 1 HR Signal: Action Good: Notes: $0. July 29.APPENDIX IV: FRIDAY 1 HR TRADING CHARTS Illustration 4 Friday.50 / barrel Short Yes Could have made money from short signals during day 34 .

Illustration 5 Friday. August 5.60 / barrel Long Yes Could have made money from long signals 35 . 2011 Grid: 1 HR Signal: Action Good: Notes: $0.

2011 Grid: 1 HR Signal: Action Good: Notes: $0.60 / barrel Long Yes Could have made money from long signals 36 .Illustration 6 Friday. August 12.

90 / Barrel Long Yes. 19. very good Rally in last 4 hours 37 .Illustration 7 Friday. 2011 Grid: 1 HR Signal: Action Good: Notes: $0. August.

Illustration 8 Friday.65 / barrel Short Yes Good drop in 3rd hour 38 . 2011 Grid: 1 HR Signal: Action Good: Notes: $0. August 26.

2011 Grid: 1 HR Signal: Action Good: Notes: $0. September 2.50 / barrel Short Yes Plum line never went to positive slope while under yellow. therefore short signal still applies.Illustration 9 Friday. 39 .

Illustration 10 Friday. 2011 Grid: 1 HR Signal: Action Good: Notes: $0. September 9.50 / barrel Short Yes 2nd and 4th hours provided good drops 40 .

41 . maybe caught 4th hour drop. otherwise a dull rest of day with not much opportunity.Illustration 11 Friday September 16. 2011 Grid: 1 HR Signal: Action Good: Notes: $0.50 / barrel Long. then Short in 3rd hour Maybe With change in signals in 3rd hour.

with plum slope going positive while under yellow.Illustration 12 Friday. 2011 Grid: 1 HR Signal: Action Good: Notes: $1. Great action in first and 2nd hour. very early in the day. September 23. 42 .00 / barrel Long Excellent Market went to “buy mode”.

00 / barrel Short Maybe Market would have made you wait all day for the range. 43 . September 30. but if you stayed the course the 2nd to last hour of trading would have been great trade. 2011 Grid: 1 HR Signal: Action Good: Notes: $1.Illustration 13 Friday. Couldn’t really blame you if you left for the weekend though.

Illustration 14 Friday.50 / barrel Long Yes At least 2 good rallies. October 7. 44 . 2011 Grid: 1 HR Signal: Action Good: Notes: $0.

October 14. 2011 Grid: 1 HR Signal: Action Good: Notes: $0.50 / barrel Long Excellent Plenty of long opportunities in this day. 45 .Illustration 15 Friday.

October 21.50 / barrel Short to long in 3rd hour No Signal change didn’t leave much for rest of day. 2011 Grid: 1 HR Signal: Action Good: Notes: $0. 46 .Illustration 16 Friday.

2011 Grid: 1 HR Signal: Action Good: Notes: $0.50 / barrel Long Yes Several decent long trading opportunities. 47 .Illustration 17 Friday. October 28.

48 . 2011 Grid: 1 HR Signal: Action Good: Notes: $0.Illustration 18 Friday. November 4.50 / barrel Long Yes 2nd hour starts some good long opportunities.

November 11. 2011 Grid: 1 HR Signal: Action Good: Notes: $0.Illustration 19 Friday.50 / barrel Long Yes Dull minor Holiday trading. 49 .

Illustration 20 Friday. November 18. 50 .80 / barrel Short Excellent First 5 hours gave you all you needed if short. 2011 Grid: 1 HR Signal: Action Good: Notes: $0.

51 . 2011 Grid: 1 HR Signal: Action Good: Notes: $1. November 25.00 / barrel Short Yes Starting in 3rd hour action from short side was very good.Illustration 21 Friday.

52 . December 2. 2011 Grid: 1 HR Signal: Action Good: Notes: $0.50 / barrel Long Yes Several times getting long produced profits.Illustration 22 Friday.

53 . 2011 Grid: 1 HR Signal: Action Good: Notes: $0. market went into “buy mode” with change in slope of plum line.Illustration 23 Friday. while under yellow line. December 9.60 / barrel Long Yes Earlier in day.

while under the yellow line.Illustration 24 Friday. December 16. 54 .50 / barrel Long Maybe Market went into “buy mode” earlier in the day when the slope of the plum line went positive. Market made you wait all day for results. 2011 Grid: 1 HR Signal: Action Good: Notes: $0.

with shortened hours to boot. December 23. then you need a vacation from trading. 55 .30 / barrel Long No.Illustration 25 Friday. 2011 Grid: 1 HR Signal: Action Good: Notes: $0. it’s Christmas Eve trading If I have to tell you not to trade Christmas Eve.

December 30. 2011 Grid: 1 HR Signal: Action Good: Notes: $0. 56 .50 Short No.Illustration 26 Friday. it’s New Years Eve trading Same as last week’s message.

Illustration 27 Friday. 57 . January 6. 2012 Grid: 1 HR Signal: Action Good: Notes: $0.50 Short Yes First 2 hours made you your day.

58 .60 Long Yes A couple of good long opportunities throughout the day. January 13.Illustration 28 Friday. 2012 Grid: 1 HR Signal: Action Good: Notes: $0.

59 .60 Short Yes Several good shorting opportunities throughout day. 2012 Grid: 1 HR Signal: Action Good: Notes: $0. January 20.Illustration 29 Friday.

January 27.Illustration 30 Friday.40 Long Yes A couple of good long opportunities. 2012 Grid: 1 HR Signal: Action Good: Notes: $0. 60 .

that put us into “buy mode”. 61 . 2012 Grid: 1 HR Signal: Action Good: Notes: $0.Illustration 31 Friday. while under the yellow line. February 3.40 Long Excellent First blue box on left was a slope change in plum. Excellent buying opportunities all day long.

62 . 2012 Grid: 1 HR Signal: Action Good: Notes: $0.Illustration 32 Friday. February 10.50 Long then short in 3rd hour No Profit opportunities few and far between.

35 Long No The lowest range day in a very long time for a non-Holiday. February 17. 2012 Grid: 1 HR Signal: Action Good: Notes: $0.Illustration 33 Friday. 63 .

***End of Appendix IV*** ***END OF DOCUMENT*** 64 .Illustration 34 Friday.50 Long Excellent Several good long opportunities for profit. 2012 Grid: 1 HR Signal: Action Good: Notes: $0. February 24.