“Time to burn the building down!”
I’ve made the decision to stop the signals subscription service to subscribers
for WTI Crude Oil, effective immediately, for 2 very big reasons; 1) the
problems with NADEX are insurmountable on so many levels and they will
not entertain any constructive criticism and make changes, and 2) given #1,
unless you want to be a professional coin flipper, there’s no consistent way to
make money in their call spreads based on volatility. Directly below, the last
2 months daily candlestick chart of WTI Crude Oil, with commentary.
click to enlarge chart
As you can see, only 19% of days is volatility good enough to make money
… the rest losers … and most of the winners aren’t nearly as big as the
premium meltdown you’ll experience, so your losses will be much bigger
than your overall gains. And if you’re thinkin’ the solution is then to be
short, that means you’re constantly short gamma, and on the days it blows
out of the box, your losses are going to be huge, and most likely catastrophic
… in short, account killers.
NADEX has a lot to do with this, and every other market they host, being
nothing more than a gigantic slot machine … put $10 in, get $7 back. In
addition, their sole liquidity provider [IG Group, their parent] refuses to
make adequate volatility adjustments when oil gets slow … oh sure, when oil
goes nuts, they’ll be the first ones to ramp call spread premiums higher the
next day, and most likely the entire week … they’re pathetic in adjusting
them lower, simply cuz they don’t have to when there’s no competition. Add
in idiot bid/offer spreads with high round turn commissions, and sure, for
the house it’s a great deal … for customers, it’s a ripoff. These last 6 - 7
months have been a real eye opener for me, as I’ve watched volatility across
the board go from total insane, and then crash within 10 - 14 weeks in almost
every market, but none more so than crude oil … and the premiums during
that time? … sure they went down some, but not nearly as much as the level
of volatility. In essence, this is like buying a chocolate bar, and while the price
stays the same, the size of the bar keeps shrinking.
So, no more signals, no more NADEX … I’m going to keep the site though,
and furnish content on the crude oil market from day to day … maybe at
some point I’ll have specific futures commentary, and if you want you can
trade CFD’s in oil, but be advised almost all of the CFD’s out there on crude,
are a complete rip off, including Turnkey’s pathetic CFD, where the spread
can be anywhere from 3 cents to 7 cents at any moment, and slippage will
definitely piss you off, no doubt … the e-mini from the corrupt CME trades
500 barrel contracts with a 2 ½ cent spread, and I’m not sure what ICE trades
in Brent … check it out if you’re interested.
So, some new content coming with a slightly new look … helpful hints, some
trading tools, and of course commentary you ain’t gonna get anywhere else
on the net … looking forward to it!
Have a great rest of your weekend everybody!
-vegas
