Making Money in Oil - What the Pros Know

0:01 what's up Traders Anthony cordelli here and thank you for tuning in to the Futures Radio Show podcast welcome to today's panel on making money in oil what the pros know we'll also be talking a little bit about natural gas as well on today's panel we have independent Trader Andrew at Traders com on Twitter and the Traders Community you can follow them at traderscommunity.com and of course my co-host once a month who needs no introduction more at ascar the founder of edgeclear otherwise known as Futures Trader 71. today's podcast is sponsored by edgeclear Futures radio show listeners can now Trade It Edge clear for a low introductory rate of 59 cents for most Futures products and 20 cents

0:47 for micro products and event contracts phone with as little as 100 and pair this with Sierra charts Teton order routing to receive one of the lowest all in fees in the industry for new I Edge clear members only check it out at myed.ge Deli 59 I have that link in the description here on YouTube if you're listening to this later on iTunes you can always go to anthonycardelli.com to get that link now before I get Andrew and Moret in here I want to remind all of you that Futures radio show podcasts are recorded and posted on iTunes Spotify Google podcasts and pretty much everywhere you listen to your podcast so be sure to go check out the audio

1:33 version of these podcasts And subscribe there throughout today's live discussion here on YouTube subscribers to the YouTube channel can ask us questions in the chat so please take a quick second And subscribe to the channel and hit that like button as I look forward to chatting with all of you throughout Today's Show I'm gonna bring in my brother Morad and Andrew guys what's going on well welcome and thank you for having us having a son there mate hey how you doing dally I'm doing great so I think we start off with Andrew you know Morad people that tune into uh this show with you and I they know enough about us we want to go to Andrew Andrew's got the whole set up there right now and uh the one of the things I

2:21 don't know a ton about you but I do know that you you know you obviously you're trading oil and you're trading natural gas but you're a rugby guy and I never mess with rugby guys about the toughest toughest there is and I just want to start off with a little bit about your background and how you went from rugby uh into Trading uh well way back when uh I was fortunate enough to be good at sport I guess um so I wandered in and became I actually got signed at a young age by one of the top rugby clubs uh back in Australia um and there's rugby league and rugby union for those of the rugby percentage at the same time as at University um and part of the reason my initial job was uh which was in uh economics and

3:08 futures um was so I could have Monday off you like that to be coming from the weekend so I guess it was considered a good PR and then uh I became successful um in bond trading and currency trading originally and became quite quite big and uh saw a lot of a lot of as you've seen when you get pretty big in that stuff you see a lot of controversy um and then I was fortunate to travel around the world through football and through trading so I worked in London and Paris and eventually ended up in the uh great state of Texas and part of that initially was combining coaching rugby and played a little bit I

3:55 got the bug again made a bit of a comeback in France um and then I just came back through trading so over time I would you know I've traded for some really big shops some big size and stuff uh oil obviously all started in Texas about geez about 15 years ago I guess oil and natural gas so that's my background I found along the way a lot of good Traders um came from that Sports background because we're so I don't know stubborn or pig-headed but very disciplined a bit worried about the concussions probably all good um so that that's me yeah interesting very interesting background and you know

4:42 it's I've met a lot of ex-athletes that come into trading you know we were in the s p pit we I had Blackhawks ex-blackhawk guys uh Troy Murray stood directly in front of me um and so I'm very aware of how many college athletes especially when we were down on the trading floor basketball or football guys because they were so big you know athletic I mean I think that trading really is I would say a sport in a lot of ways it's because it's competitive juices every single day and like you said you know you're stubborn because you want to win you want to be competitive and you fight through adversity and so I think that you know with trading there's definitely some adversity involved in it right right actually just on the pitch I remember I was in New York for probably a year uh

5:27 trading but I remember the oil pit was pretty well full of New York rugby guys they give them jobs because they're just basically big guys you know so I was more the speed guy not the massive guy but a couple of my best uh friends are also from the MMA world so martial arts so they're very disciplined as well um it's really interesting because I think it also adds to the the um the the Focus right definitely different I think the Apple thing every big Trader I've ever known and when I was saying big as in you know millions and and big size they've either been really fit or what we say is they get chemically prepared right so the fitness the the

6:14 um the sports side of it gives you that good mental but also the diet and all that sort of thing we're able to do it I guess the downside which you've got to watch and it's why I use a lot of technicals is we tend to be Risk Takers you know particularly rugby league is Extreme it's an extreme sport you've got to be kind of extreme to play it so that's the downside you know so you will and I think anyone that says they haven't had big losses really hasn't traded so you know from that that level that's but yeah I've met some really interesting people yeah well let's dig into it today I think you know Morad you and I were talking about this we spent so much time talking about equities this year because everybody wants to talk about the fed and interest rates and how it's

7:00 impacting and it's going to be interesting it's going to be good to talk about oil and natural gas um and you when you know when you and I were talking more we talked about how really the the crude oil Market is really trading very technically sound I think were some of the words that we used over the past um a couple of months I think when we get into talking with Andrew today I mean Morad one of the things I want to talk about is really the technical aspect of it the macro aspect it's very different I think than trading the s p um because I think that there's there's more variables inside when you're trading a commodity like oil right like I think you kind of have to know the macro drop even though you were saying

7:47 you know yeah it's been trading very technically sound I think we may be start with today Morad how's the trade been from your perspective is it just because you're following the technicals that you think it's it's the trade looks very well or are you following the macro as well I try to follow the macro so I'm fought you know and it's been such a big emphasis since the pandemic started um in in February 2020 where I'm paying a lot more attention to macro because you know the market behaves in a certain way and in this this pandemic came along and there are people who are calling for the end of the world and there are people calling for huge opportunity and

8:33 I felt that the technicals became absolutely and completely disjointed and in that sort of an environment the technicals don't really kind of operate normally so I became a lot more interested in the macro when it comes to crude the the thing with crude is it's always it's it's it's eaten my lunch a lot um but it's also a very um you know it's a it's a fundamental product it's a physically delivered product everybody knows what it is and it's it's impacted by just a huge variety of of of inputs things like um you know Europe and and the moves it made against Russian crude uh what

9:19 China's doing China's reopening my point being even though I'm pretty much entirely a technical Trader it's really impossible to turn a blind eye I can turn a blind eye to to macro and trade the s p just fine because exactly there's so many participants there are uh mutual funds in it there are retirement accounts in it there's just so much going on there trading those those blue chips but crude you have to pay attention to macro you have to understand there has to be an understanding of what sort of impact is a policy out of Europe going to have on Supply uh what's going on in

10:04 Libya or Nigeria or whatever it doesn't mean that I know where crude is going to go based on macro information I'm just I'm just not smart enough to know that but I just need to know that every once in a while it may go haywire and I just can't fight it because there's some macro thing that's going on that I'm still unaware of that I need to just step back from it let it kind of settle down before I step back in that's kind of the main difference I see between crude or any fundamental product versus um the indices which I'm much more focused on yeah it's totally a different animal and we'll go to you Andrew I think you know I actually found you from some macro people um you know I listened to shy girl spaces uh yeah I'm now in Tracy for a

10:51 long time she's really smart lady yeah yeah and so I trust her on on what she was telling me about you know some traders that are trading in the space and oh boy and I know she knows the macro really well and she brings on unbelievable guests every week I know her spaces is uh always following uh the the inventory numbers every week and and one of the things for me is I like I tune into that and I listen to that and I read the stuff that she puts out and other people how much of of the macro plays into your trading Andrew well I think what you're going to do is understand the oil market and what you're actually trading and natural gas is even more so that so you've got the US WTI uh is our main vehicle but there are other things other instruments in

11:38 the states obviously the different physical products but we'll stick to WTI which most of you know is CL um as far as the future goes a lot of people make the mistake of thinking the ETFs Uso for example trades with oil or oil stocks trade with oil um and there's so many Macs so when I think macro I think you've got to have an understanding of Foreign Exchange and bonds before anything because they run everything I think stocks the stock market the indices are the last or actually individual stocks are the last to jump on it and you can see that that clearly as the spruce goes that at 4200 it was pretty well a given under

12:24 every Technical and fundamental sell it right Bonds were telling you that and it's been interesting that the dynamic with and oils even more this but they they want to interpret power with what they want him to say does that make sense rather than the market as far as oil goes um a lot of what used to be relevant macro data isn't relevant at the moment because there's so many players out that have left crew because of they probably blew up the new money to 130 uh on on ours you know and Russia invaded Ukraine and natural gas the same so it's few big players effectively controlling

13:11 it as far as the financial side of it goes so then you've got to understand so when I was trading size you got to look at what I was doing so and what I was like me were doing and now others are doing it so you can't just get out of 10 if you got a thousand lots to do you what I so people like me would use a combination technique or macro so you've let's assume you've got that macro base you under you're trying to understand what's going on in Russia uh Putin the US the the trouble with the US I actually think the US is a lot harder to work out and because it's so partisan here there's no sense and I think I say that over the years

13:58 it's got to where the politicians almost know they can do whatever and not have a skill and we've seen that with both parties over the last 12 years so you know Trump and Biden and their things so that doesn't impact because they're latent decisions uh you know and just on on the macro on that I remember when Biden won uh we were at a probably at a bar um but with other oil Traders and I said the best thing that can happen to oil is Biden wins and you're like oh and the reason was because of the policies right um so before even Putin attacked um Ukraine oil was already 90 it's just

14:43 been a a game to tell you you know an excuse however redirection and it's partisan all that sort of stuff and and we know and Trump was in he was oil was getting smashed right because his goal is gasoline so that's your basic backdrop and then when you look at what's now going on on Finch where we call them the dribblers you know people that come to the market to sell their whatever have no idea what's going on so they're effectively taking the other side because they're guys in so if you take that American you just got I think you've got to be technical during American hours because there's so many uh just I don't know what the word I would

15:29 use it's probably not one I can say but that's so silly that a trades um so what I use technically because I believe in crowds that's what's happened I think and so the studies I've used over that we came up with a theory called Nova wave which is basically just a play when I was in France and my last name um but I believe that uh in best measurement of crowds with Ralph Elliot but the guy died in that job an Elliott wave I think if you um the problem with things like Elliott wave most people that use technical analysis and I'm sure you'd agree is that they already have an idea and they try to form fit it so this is what it's

16:15 got to do if they're wrong they blame the study uh and again I loved his work and what you'll see on the noble wave is Murray math so I'm very big on math and I think our goes run everything 85 definitely the SMP so I try to work out what are the hours doing so that's why I think our technical stuff works and I want to know where I'm wrong you know that's the thing and so a lot of oil people they're either Bears or bulls whereas the thing will change non-stop just look at a weekly framework on that it's pretty cut and dried and so Nanette I know a lot of big guys that I can't really mention um but what they're doing right now is there's selling them they're trading a lot of physical oil but the financials

17:02 particularly on OTC and natural gas and oil they're able to sell so much roll right look at oil oil 70 to 80. since Adam was a boy it seems right and the same as um in the spoon [Laughter] the same in the spoon is like is it JP Morgan I believe has that massive phone where they just sell low and they're just sitting at I think at 4200 or 4100 I'm trying to forget one of you guys remember mentioned it so that's controlling it and you've got all these people that I don't know that all of a sudden I know everything about trading and everything is the conspiracy if it doesn't go there and

17:49 we're definitely going to talk about natural gas what I want to do is I want to peel it back a little bit here too I want to get a little bit into the weeds with you and you know I I appreciate you explaining kind of like you know your view of how you go and approach markets and a lot of it I agree with and I think that let's take it back I actually put a poll out there everybody if you're watching this uh obviously you're watching it on YouTube it's the only place for streaming right now participate in that poll so far I asked do you trade crude oil and uh almost 60 say that they do and other people that don't or obviously watching crude oil because it's a commodity that impacts everything we do right I mean it's and it's going to impact uh you know on the Main Street as much as going to impact markets so what I want to do is I want to take it back let's start from from a from a point of okay I'm coming in I am

18:36 a retail Trader trading oil I think there's a few things that you know you have to really kind of dot your eyes and cross your t's before you even get to the screen so let's really go really slow with this maybe and say what is the first thing that you would recommend to a Trader before they're going to sit down and start to trade oil and is it develop what what understand the macro backdrop indicator what well I think the first every Trader and this is probably the football background I mean that I think you got to have a good defense before you have an attack right so you've got to know your risk and understand risk and get be I think you've got to be mentally prepared to trade full stop so we we all know all us that have been

19:21 traders that it's not perfect you don't buy here and you go straight into profit so I think before you do it you learn to handle it um so then as far as technical analysis you you've got to have stuff that you know where your support is so that the reason I like uh things I can and ichimoka is it's trading at the market so I I don't like the latent so in other words you know where you're wrong pretty damn quick um I don't like the slow like when we were all started off trading it was stochastic RSI uh even a lot of the Elliott Wave by itself is too much room to be wrong and I think if you're a new

20:06 Trader um two things happen you either we all know that I call it GTC your stop loss has become good till close right and then they just take him away and then the trade becomes an investment etc etc so you to avoid that you've got to have the right size on and you've got to have a system and a product that's the other thing a product that when that's liquid that you can get out so I only trade liquid things and every time I've had trouble trading I remember when I was uh changing coming from France to America to change my um to a green the green card right so I had to trade day trade stocks this is way back when I found stocks so different to other markets I

20:54 couldn't work out I was constantly losing money so could have been a market that is liquid and follows rationality you know and and I think um you said before that what's beautiful about the Spurs it's so deep so I think e-minis are a great way to learn to trade because they're they're liquid they're deep and now in oil uh as far as WTI goes when to trade it is kind of now not when um you know uh Putin's attacking someone or or we Iran's attacking someone or something like that or then it all becomes a political thing because the big guys just get out and I've never understood why little guys want to trade when we're like well we're not going near that you

21:42 know and and as far as the hedges goes most people aren't even aware that goes on you know uh and just I think if you just think logically and then dial that back so if I'm trading crude oil I want to learn the major if I'm coming new to it I want to understand the market so if I'm teaching WTI I do want to understand what Exxon Chevron um and these guys are doing and saying and I do want to also if I get a a chance to listen to say vetile or someone like that I'll plug into that I want to know what's going in the background but understand it then I can tell you what they're doing that's what makes me laugh but so then technical technical I'm all

22:30 about just uh the having a discipline of ichimota Murray map I need that discipline and I think everyone should have that or a similar um technical indicator that you guys use is probably very similar I want to know when I'm wrong because the competitive for me is I need to know when I'm wrong now the other thing is you're not going to beat algorithms you've got to work out what algorithms are doing and be proactive to them that's why I think we I've worked out that's what they're doing and we also know there's so many people trading options that shouldn't be trading options right zero dtes man that's the new thing man all right so come on I remember back in the day we would do uh the same thing

23:18 like sdo same-day options for crude and natural gas and citadelically blew up on these back back in the day I think that's well known so I'd probably mention it but but so there's a difference between selling risk and binary so you'd buy them when the risk worked out but what's happening is people are paying so much overs in thinly particularly in stocks thinly traded uh same day options it's effectively what they become on Friday right and you just think do you really know how far that's got to go for you to make money and then you've got the other side where people are selling them not knowing the risk so all that is knowing well that's is a great way to trade it as well if that's the other thing it depends how much money you've got I mean are you an

24:04 investor a punter or a Trader I think same day trading or day trading is a very difficult game you know oh yeah actually I want to talk more out about a couple of things I want to bring you in here remember a couple things that he said that I think are important and I want to go over them with you number one is he wants to know where he's wrong quickly one of the things that I have found on the S P versus like crude oil and he even mentions like stochastic look at natural gas like the last thing you want to trade in a market like natural gas is like an RSI or a macd or something like that an overbought or oversold because those markets can stay overbought or oversold forever I mean not forever but unless it's natural gas yeah so one thing is you've got to know

24:51 where you're wrong quickly I think especially when you're trading like a natural gas Market because as if you're not really aware of the fundamentals you can get just run over on these one-dimensional moves I mean natural gas this year is a perfect example every day I see somebody trying to buy the dip in it for months and it's just been dead wrong right and no matter what your oversold indicator is so knowing where you're wrong quickly in an indicator and the other thing he said Andrew mentioned was liquidity knowing the product Maura you know all the different Futures products there are now on crude oil you know you've got micros you've got event content you've got so many things for it so I want you you know from your perspective more I talk about some of the products you think about a Trader picking them and choosing them and some indicators as well for oil and natural

25:36 gas so the first thing I would say is don't go up against Andrew so figure out what he's doing and just don't read it I don't know about that you're not always one that again derivatives are not suitable for all investors with that being said I would at all costs implore you to not trade CL because this is a this is a huge contract and it's physically delivered and you're relying if you don't understand when the last trade date first notice date all these things occur you may own a tanker or two of crude oil that you you're you're clearing for we'll have to figure out how to get rid of it great expense

26:21 to you I would strongly recommend you look at the MCL contract on nimex it's financially settled uh it's it's low cost it's low tick and you can figure out all your problems in there at a much lower uh and less risky uh approach um so that's that part the second part about knowing where you're wrong or knowing your risk this is a fundamental piece like Andrew's just kind of stating the unsexy part of the business of understanding risk first like where am I wrong why am I moving a stop why was the stop there if I'm going to move it that's kind of a silly thing to do

27:07 but also you know if you're using RSI CCIS and so on I challenge you to go and do the math of how that indicator moves to figure out how many ticks in that gas it takes when it's above 85 percent for it to go to 86 percent because it takes a lot less ticks to Move It from zero percent to five percent then 85 percent to 86 percent so it could be overbought and Maddie can go three dollars and it may still be just a little bit more overbought so if you don't understand the math of these indicators you're setting yourself up for a huge surprise so for me in terms of liquidity which is

27:55 the other piece you brought up everything is an auction I look at everything as an auction it's I'm an auction based Trader and if the pro If the product is not liquid enough and I believe crude hits that for me hits that sweet spot of being thin enough that you can find out if you're wrong or right real quick I don't have to sit like in a in a you know uh Euro stocks 50 or a uh a you know a 2 your note position for three days to figure out if I'm right or wrong crude tells you pretty quickly so it it's right there you know when when the s p gets really slow and just doesn't move around my go-to is crude or NQ I think NQ is a little bit nutty

28:40 these days so I don't I don't go there yeah but Croup is is has that right thing again go look at it in the micro don't look at the uh the regular contract now if you look at natural gas and so on or our Bob even worse there's not enough liquidity and there's not really an auction going on that is orderly which automatically means to us as traders that we can't really properly Define or control risk another caveat is for those of you who are trading in May of 2010 I was around um the market had a flash crash where it dropped like huge within a few seconds somebody fat fingered uh trade and it

29:26 just all these stops triggered and it's just absolutely the book was just destroyed so what the CME did as a part of that is they limited the amount a stop can the market can trade through a stop and still trigger it what does that mean to you that means that if you go into natural gas or our Bob you might have a market stop that actually doesn't trigger this is very very possible bonds much to the surprise of many traders that this happens you could you know you expect the stop to trigger at some market price even if the market you know I'm long maybe the best bid is eons down or whatever because the CME has taken steps to curb those crazy algorithmic kind of movements your stop may just be sitting

30:14 there and uh and refused by The Exchange so be smart trade something that has some liquidity and and stay away from the very very thin Energy Products or any product at all and and make sure you understand what you're getting into in terms of risk again the best way to do that is to either simulate which has very limited benefit to be honest with you in my opinion uh move to the micro products or you know the other one that uh Andrew brought up is uh the zero DT uh Deli and now talked about it zero DTE options and you know going into these crazy people going into options most people don't understand that some of these musicians

31:00 have infinite risk you know and uh it could be much much bigger than your account size so this is where event contracts is are at peace um are a piece that comes in like event contracts on eia inventories release has some pretty interesting implications where the maximum risk is predefined at twenty dollars the worst case scenario is twenty dollars per contract this is another way to get your feet wet uh coming into this sorry I covered a lot there but tried to answer everything you asked Captain Ron was saying wow so don't trade crude oil good to know kind of like a laugh thing but the point of it is it's like you know that there's options right for it meaning that you can trade the micros you don't have to just step in and trade the big crude oil contract that's the point that's being

31:46 made because most people don't financially have uh the money or are good enough to be trading the big crude oil contract right do you want to be in there with Exxon and shell and you know do you want to be in that same product or do you want to be in a product that's much smaller that actually tracks it very tracks the the big product very very well surprisingly well yeah exactly a couple things I want to go do because I want to get to you Andrew I want to get your thoughts on what you think about the current market environment and really how you're going about trading it but one thing that we have to do um is we're giving away four 250 dollar fuel cards nothing like giving away some fuel cards some uh some gasoline and a gas show and what we do each and every

32:32 month uh Morad and I do is we take a bunch of names you can go to edgeclear.com lash Deli to participate in these giveaways every month and we do that too to really just give back to the trading community and like I said you can learn more about what we're doing just go to edgeclair.com Deli you can also see that link in the description if you're watching on YouTube or of course on iTunes and here's the wheel for this week's uh results and winners and more and once you go over these winners and explain why they're six when we're only giving away four yeah so we normally run this wheel during the show and it takes a while for there are a lot of names on there so it takes a while for the thing to spin and all that we didn't you know it kind of slows down the flow of the good stuff

33:19 the information that Andrew's sharing with us so we pre-recorded the um the winners there are four cards four winners so the top four are winners alhaji Frosty Lane J jkp and arcade 1953 and then this the the fifth and sixth are runners-up in case those four cannot be contacted or there's a reason why they can't claim it we have uh two Runners up and those are hedge fair and Union 33 so those are the winners um and as soon as we make contact with you and so on we'll shoot you over this uh these 250 dollar fuel cards awesome and so we keep it's funny so we

34:05 got another person talking about this WOW podcast about crude oil trading warns not to trade crude oil we're talking about the big CL isn't it funny how things this is like it's like Twitter on here now everybody although I am right now bounced off of Twitter uh for now um I I think the one thing and I want to clarify this for everybody is is that look at itrade CL I've been trading for almost 25 years Andrew does Morad does we've been doing this a long time we're trying to educate Traders and give Traders an opportunity for success and how you do that is choosing the right product not everybody should be trading the big CL product you earn your way to getting there the one thing that I think is the the worst part about having access to technology to be able to go in

34:51 and trade any single product whether it's crypto Futures stock zero dtes is the excess is too easy you have to earn your right to trade these big products I was a clerk for years a runner and then I got into the big s p and what happened when I finally even got there the big s p was too big for me I went and started trading Minis and and the whole point was I had to get to a product that was gave me the best opportunity to win we are saying that these products are great products but the point of the matter is not the big CL is probably not for most Traders and I think we go back to you Andrew and I think we just you know continue to talk about that um because obviously we're all pro Futures here this is Futures radio show has nothing to do with that we want people to um be able to to succeed and to have

35:37 long careers in training and so Andrew what I want to talk to you about is let's talk about what you're seeing right now and I think also when we talk let's start off with crude oil but also talk about like maybe situational times when the bigger CL is even a better trade for for someone versus using a micro or using an option I think this is also very important for people to understand that they don't have to just come in and trade the big product to choose between the different options uh options themselves as well um to be able to trade these products so what are you seeing in crude oil and then talk to us about how maybe some Traders um in helping them choose how big of a product they should be Trading well I think the gist of everything we're saying is what kills Traders

36:23 particularly Futures Traders is Leverage um bingo so if you can afford if you know what you're doing in a Ford CL and then you trade accordingly right you know you and but you've got to understand if well there's two risks there's event risk and Market risk um so if you trade oil and you trading for a hedge fund or a uh corporate and you have to have a position you've got event risk I.E what happens on the weekend over the weekend so you got all that if you can't afford those moves which can be 20 30 percent against you or for you um you shouldn't go near it right um as far as day trading specific I I mean we all get emails or spam from

37:11 people that don't actually trade saying they got a system that you know day trading perfect understand that's a very difficult game so you want to be as small as you can while you're learning the um the different specifics of a certain contract I've got to be honest I've never traded anything smaller than CL so I'm not familiar with how liquid those minis are um I know I I I I really don't know so if they're liquid they're definitely the way to go as you learn the ropes um if not perhaps you I mean you've got to learn how so if you can't trade CL um let's assume the Mini's liquid then

37:58 trade them and learn how they trade learn that role that we were talking about earlier how that moves um and yeah it is the here's a saying I learned two sayings that stuck with me for crude oil or Commodities full stop the rubber always meets the road and you're seeing that in natural gas so they can the dribbles can get out there and pump Prime these things and try to get you into it at the end of the day they come back to where the real price is and you've seen that unnatural gas right oil does much the same normally it's not a normal time in oil now because of you've got one of the big players effectively Russia is just selling oil to China and India just keep it as

38:44 simple as that right um and things like that so the Dynamics have changed um as far as another interesting comment was uh you didn't say perpetrating what did you said um anyway they're not the real trading can actually create really bad habits and unreal uh of what the market is like like you might not get a stop done at what your simulated trading will say you might not get the price I've had to buy even with size going through Brokers it may take 70 or 80 cents to get out of a position in crude oil which is nearly a dollar right so that's 700 a contract think of it like that right um

39:30 so and that's the most liquid energy product natural gas or maybe Brent's the second most but then you'd have what we know as Henry Hub you know so um but it's a great thing to trade if you're discipline you've got to be disciplined because there's so many and you've got to understand Mac you've got to understand what the US dollar is going to do you've got to understand what the two-year and ten year spreads gonna do because that impacts so much more than explain that let's stay on that for a second because that right now is a big topic I think obviously the dollar we all know is pinned to to crude oil because it's crude oil and US dollars so I think people can understand that comparison but talk about that 210 because I think that's important right now right so if you think of interest

40:16 rates think of the firstly the Fed rate firstly I think the Bond Market made the FED raise rate I don't think it was the other way right um I think the the two-year is the closest thing to the FED fund which is what we all know that we're going to raise the 10-year is your benchmark as far as so basically every country in the world has a 10-year you know so in the England guilts we all saw that craziness that happened when was it it all seems like yesterday but it was probably eight months ago so uh well looking at the screen make me look around um so what what was significant there and I'm I'm kind of detracting but I'm

41:02 not that was the first time a major um country a G5 or G7 all of a sudden got buried by the market on um just printing money right and printing that and I got rid of truss the danger that could happen in America I find that unlikely I think we're so big and I actually think the FED knows what they're doing pow and I think Powell coming from the corporate world knows he doesn't want to blow the country up the economy up whereas politicians are just all about their own thing the problem is so if we go to I kind of got off track sorry so the two-year is what us are

41:47 going to borrow at if it's based on fed funds the 10-year is going to be what corporations are going to base it on and of late you've noticed the five year has been moving everything around too so you've got three that you want to do as far as currents uh the US WTI goes what's really relevant is gasoline for us so it's a political thing I mentioned that Trump remember he pushed oil down because his goal was that and then when Biden comes in it's the same thing gasoline because it affects inflation the relevance for that is that it's priced against Grant effectively because it's priced on North Harbor gasoline which we know is our Bob and if anyone's traded that people get on Twitter and

42:36 they call Natural Gas the Widowmaker I think heating oil and the only thing I've really been lit up on uh unless when you're dead wrong on energies trying to get out of Arbok with more than just just it was like just eight they're both widowmakers well Natty I know what's going on all those moves like pretty much on our office but what the yeah um so yeah you do not want to be trading any of those things if you don't have to and I remember I was a market maker for a little bit and and I wanted to make markets in WTI and Brent for example in options there

43:21 was three people in the world that make me a market so to join it that gives you an idea how liquid they are and that is the biggest spread in oil is WTI versus Brent so I don't think people realize how how thin they are then we have the political movement where the eecg or whatever where you couldn't land right and that you couldn't land the banks we had a Fed Governor that was putting up saying don't let him to um to fossil fuel companies but what that's done for a good thing I'm a I believe in free markets for the most part is it may it's made people like X1 so efficient and and uh Diamondbacks another one

44:07 these guys are so efficient now because they've had to be the way they've the the cash um management and stuff like that and what's interesting is the antagonism I guess living in Texas and I think from Australia knows that more than ever uh between different things you know that's all affecting your price right so in a roundabout so all that affects everything that affects your bonds your bonds affect everything I think um it definitely affected currency prices um you've seen for example the dollar yen is all about the jjb and and the yield Credit Control that moves the U.S bonds as well it all has a knock-on effect and if you can get ahead of that

44:55 and stock markets would be five to six days behind generally um you've got a macro view where you can just say that we will take the Spurs of 4200 you it was overboard on probably everything but macro you knew there was a rear so I look at it's not risk reward I hate that term but um I look at where most people are and most people are going to be wrong to go against that right with protection so does that any of that make sense that I just dribbled on about that's a lot of dribbling what I want to do is we only have a few minutes uh left to go here today if everyone feel free to put your questions in chat um and I think that you know some people

45:40 are talking about one crude oil one negative two and you look what happened there when people didn't think that they could run through a negative price and I know a lot of my prop Trader friends that just got blasted on that day yeah that was terrible but it's terrible you know and some people got rich on it too I mean you know it's it's always it's you know but the point of it is is always everyone talks about managing risk a lot of that is have being in the right products as well I think that we really emphasize that today I think what I want to do is with the two of you before we go today number one if you guys have any questions out there on chat I love the commentary I love the pushback and all the different things that you guys put on that uh uh in the chat it's important to us it's a conversation I think what I want to do is just really kind of like let's give everybody kind of the landscape of where we are right now the current Marketplace

46:26 and how you're approaching trading whether it is oil or natural gas I know I see natural gas is squeezing a little bit right now I was moving some charts around but I think maybe we start with you more than we end with Andrew get to your charts on a day I know you're mostly technical based but I think that today I just want everyone to close out with the idea of what do I do to come in and how do I come in and give this my best effort to become successful at trading oil or natural gas or energies energy markets I'm actually going to have Morad pull up his screen and there we go this is what are you Andrew after this this is exactly what Andrew was talking about crude seventy dollars to about 83 bucks this is all we've done since December all we do is test the

47:13 edges go back to the middle The Edge go back to the middle and so forth for me for some time now the dividing line has been 77 77 and a half depending on the contract these are back adjusted so 77 and a half if you drew a line through 77 and a half and you could see it in the volume profile here there's a little divot we call it a low volume node this is sort of the Divide in line so to me as long as it stays below 77 the target for me which we hit today was 74.80 and that just kind of cleans up these shaded areas which are kind of poorly traded areas like areas that we ran through too quickly to really um assess whether there is any value

48:00 there and so remember about my value kind of um auction type Trader so to me you know from here if it doesn't find a base at 74 and starts turning back up to retest the 77.50 then the next stop is going to look like 72.50 I need to see it break through the 74. pretty strong weak pullbacks unable to kind of hold higher prices to start gunning for that 7250 which by the way was very swiftly rejected you could see it opened uh it opened inside of this prior day went down cleaned up this last low from January the monthly low and finished almost where it opened this was what was

48:45 called what we call an excess low and we're kind of moving towards it so I think it's going to have a harder and harder and harder time pushing lower but if it does if it kind of holds a 74 and just stays offered a lot of money a lot of liquidity is probably sitting underneath these 7250s and the Market's likely to check that but I'm very curious about Andrew's comment early on about understanding what the Algos are doing this say I can all we can almost do a show on that because I don't know how that works the algo part how do you determine what an algo is doing very curious about that I'm pretty sure that um you do have a good handle on it because looking at what you see it's a

49:30 lot to do with pocs and stuff like that so that's math know that much algo is basically a map there's basically three types pure Maps which is kind of what you and I both do in different uh technical things um order they call it you know order flow uh as far as where all the stops are really that's you know let's be honest that's what that really is and the other thing is news related like if news comes out um I think you see that more in stock earnings releases but um and things like that so if you see a pattern there basically if you see uh at working you're getting you're trying to get in sync with the Algos and people that not I would say I've seen numbers of 85 to 90 percent and some

50:17 products are all computer driven so um if you can find that that's what you want and crude you have it there pretty clearly um and so you what you don't know what's going on in the Exxon for example has only just started trading in that last couple of years they never traded they just all they're hedging was done uh uh horizontal and geographically I.E country versus country so now you've got your biggest players in oil are going to be veto and truck traffic right ultrafugia however you say that and then we're curious you've got these really big players out there and then you've got some aggressive players that do it really wrong like Petro China is a good

51:04 example so for example that negative day on oil was pretty and it not well documented but it was all because uh the bank could shine and not the people People's Bank of China not the central bank launched a fund in mainland China for people to play oil and they would invest in this oil but they didn't um so you're meant to inform firstly you have a limit with the CME how big you can be and you've got to inform them two to three days I think it's it's either three days or two days what your position is you've got to be pretty well out of it all as you mentioned earlier these guys weren't out of it so they there was no one left to sell to it right and unfortunately a lot of people couldn't buy the minus 40 unless you

51:49 you're able to deliver so that was only certain people I mean I remember talking to one bloke at a big oil company I can't mention them but he was the one of the big ones goes what the hell are we drilling for if we can buy oil for minus 42 right um but anyway as a side note but um what I do is I will off if we look at that daily chart uh we know at 80 you want to get your if you you want to have a bias to your futures position so then to pay for that to take advantage of it you're going to however you make your Delta up be it out of Futures if you're getting Short Selling puts right um so you know where you are but you

52:35 know that you pretty or want to be selling puts it uh this this keep it real similar but Bay bytes of 70 a call of 80 perfect world right so you get executed either side so I will trade my Delta down to that does that make sense um and then when so basically I want to be long when it's 70 in a perfect world short when it's 80. um we talked about the same day options earlier we know that most of those it's probably 90 expire worthless so you want to get that premium in that's also taking your risk off the table now I get it that if you don't have the capital you can't do this but this is what's going on at the bigger shops

53:20 um when you're wrong is when it and this is why it goes fast if it breaks at 70 area 70 then you know it's going a lot lower and on Murray map there could be go as low as 57 you know that gets over 84 85 50 there's that massive bull flag that's for the Bulls you know it's going to go fast and that's feeding on itself right um so what makes oil go up is all going up what makes a game down is oil gain now does that make sense we all know that the games out there more than any other this whole blade told me this way back when I was first you know we know it all and we're young and he goes right that's all you need to know I'm like yeah whatever dude I'm noticing something Anthony is is Andrew's talking

54:07 as he's talking about it you notice like the brakes because there's so much information that wants to just be to leave part of the screen from his head I'm noticing that he's going wait I can't talk about that because that's a whole different thing oh I can't talk about this either so he's like trying to trying to you know Eli five it or teach it like we're five-year-olds but he's having a hard time with it but really appreciate you kind of exposing what how you're looking at things that's very useful yeah and and when you don't know you just don't have a position right I mean trying to understand um what Putin's doing or Biden's or not even here it's different right it's not really Biden it's it's I don't mean that

54:53 disrespectfully what I mean is that there's so many layers exactly which one book um and then you've got and I mean I've a Critic over the years I've got a pretty good Intel background where I have I kind of know what's really going on with Russia but we have so many different stories out there and so it's not worth looking at I mean even we should always look at um to see if well I used to always look at the cftc data we haven't had data for four weeks you know say to see whether the mark how long or short the market is so you need to have your own intelligence even it means going to a bar and talking to other Traders right you want to know what's going on you know um what I use fin twit for

55:40 um so I kind of divide the market up in between investors Traders so what we mainly do is trading I will invest cyclically in stocks you buy Exxon at 30. you don't buy it at 144 right there's certain you know but that most of them get in and then I invited in the punners and dribbles dribblers is what in Australia it is in its non-stop they don't know what they're talking about Experts of everything right I mean yeah and if we see them but they're important to know what's going on if you noticed I think Anthony might have said that they're trying to buy a dip every day on uh natural gas so they can say they bought the dip but that boil contract so I don't remember recommend trading

56:26 boil or cold unless you really know what you're doing so put it this way natural gas is considered the most violent speculative future out there why would you want to fire that up by four times right unless exactly go to bloody Vegas right we'll go to a strip club and whatever you need for your kicks because that's all you're doing at that point but I noticed all last week it was someone was at Bloomberg Reuters or Bloomberg posted a story I think Tracy might have sent it to me um the boil size just keeps getting bigger and bigger so everyone's buying a dip buying the difference it's like exactly I mean that's well that's that is kind of that's how things have gone lately right I mean

57:12 are popular and everyone's looking for the quick buck and in this business when you look for the quick Buck you get quick broke um so guys we're out of time um what a great conversation today we definitely gonna have Andrew back I think we got to bring in a big oil panel uh more ed I think we got to really dive deep into the oil industry hopefully today everybody we covered enough to explain to you guys there are other products one of the products we didn't talk about was the qm which is the mini which it moves in quarter ticks um I need to look into those because there's certain times for them you know like I trade the micros like if I just start wanting to buy oil in a small position I like the micros if I like an area for aggressively then I use the CL I think it's important that Traders know what products are out there and what

57:58 best suits them their risk profiles and their strategies but that does it for us today a um Andrew at Traders comcom on Twitter traderscommunity.com are both of those accurate um yeah go and follow you yeah and it was uh and for more and of course it's Futures Trader 71 and then um we go to edgeclair.com Deli and to see what we're bringing uh for you guys next month guys all I could say is it was great you know I think it was a really fun conversation I appreciate everybody out there engaging with us on YouTube that's what makes this show fun you guys are what make this show great um Andrew Morad thank you man from oil Andrew hit me up the next time you're in

58:44 Chicago well yeah that could be scary well for those who like rugby uh the rugby league the NRL kicks off next week so there you go um that's about it so thanks for having us on I will um definitely look into those other products you know um and I should point out that if you're going to treat something like well you can't trade everything you've got to really specialize any commodity really like even s p it when I'm so I pretty well just trade SMP natural gas and oil and a handful of stocks right liquid being the I whenever I get any others you have a great couple of wins on those and the next minute you're like

59:30 exactly oh that's why I don't trade stocks and we will leave on that note Morad Andrew everybody out there be sure to like And subscribe to the YouTube channel if you guys enjoyed this show please share it uh on social media because of you guys and sharing it is what keeps this show going so we appreciate that remember this will be on iTunes this is recorded you can listen to this on audio as well thank you everybody for tuning in I will see you guys next week thanks thank you for listening to Futures radio show if you enjoyed the show please leave a five star review on iTunes never miss an episode go to anthonycrudelli.com and get on our email list for show notifications and for free content that is exclusively for

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