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You are here: Home / Archives for Chad Butler

Crude Oil In Crisis

October 16, 2014 by Chad Butler Leave a Comment

Crude Oil has been in a death spiral for months.  What is causing this market break in Crude? Will it continue?

These are good questions. And the answer on the seemingly bottomless crude oil market is that it depends on who you ask (and how you ask it).

Zero Hedge has had a number of great articles on crude, most recently suggesting that plummeting crude prices have been the result of a deal between the US and Saudi Arabia:

Two weeks ago, we revealed one part of the “Secret Deal” between the US and Saudi Arabia: namely what the US ‘brought to the table’ as part of its grand alliance strategy in the middle east, which proudly revealed Saudi Arabia to be “aligned” with the US against ISIS, when in reality John Kerry was merely doing Saudi Arabia’s will when the WSJ reported that “the process gave the Saudis leverage to extract a fresh U.S. commitment to beef up training for rebels fighting Mr. Assad, whose demise the Saudis still see as a top priority.”

– Why Oil is Plunging: The Other Part Of The “Secret Deal” Between The US And Saudi Arabia

It was heinous. It was underhanded.  It was beyond the bounds of international morality. It was an attack on the American way of life.  It was what you might expect from unscrupulous Arabs.  It was “the oil weapon” — and back in 1973, it was directed at the United States. Skip ahead four decades and it’s smart, it’s effective, and it’s the American way.  The Obama administration has appropriated it as a major tool of foreign policy, a new way to go to war with nations it considers hostile without relying on planes, missiles, and troops.  It is, of course, that very same oil weapon.

– The Oil Weapon: A New Way To Wage War

For those to whom the recent US campaign against Syria seems a deja vu of last summer’s “near-war” attempt to ouster its president Bashar al-Assad, which was stopped in the last minute due to some very forceful Russian intervention and the near breakout of war in the Mediterranean between US and Russian navies, it is because they are. And as a reminder, just like last year, the biggest wildcard in this, and that, direct intervention into sovereign Syrian territory, or as some would call it invasion or even war, was not the US but Saudi Arabia – recall from August of 2013 – “Meet Saudi Arabia’s Bandar bin Sultan: The Puppetmaster Behind The Syrian War.” Bin Sultan was officially let go shortly after the 2013 campaign to replace Syria’s leadership with a more “amenable” regime failed if not unofficially (see below), but Saudi ambitions over Syria remained.

– A Look Inside The Secret Deal With Saudi Arabia That Unleashed The Syrian Bombing

Meanwhile, over at MoneyMorning, the speculation is that the Saudis, instead of acting in concert with the U.S., are actually trying to drive the U.S. out of the crude oil business:

There appears to be a direct battle underway among OPEC members for market share in a pricing environment increasingly defined by unconventional (shale and tight) reserves.

The move suggests that the biggest member of OPEC is prepared to let prices fall rather than cede market share by paring output to clear a supply surplus, according to a comment from Commerzbank, the Frankfurt-based global banking giant….

Today, the kingdom would need to reduce output by about 500,000 barrels a day to eliminate the supply glut caused by the highest U.S. output in three decades, according to several analysts…

Indications are that the Saudis intend to keep output steady until the end of the year, near the 9.6 million barrels a day extracted in August and September. However, that did follow the largest Saudi cut in almost two years made in August, according to the Saudi data provided to the OPEC Secretariat in Vienna at the time.

Refraining from further cuts would preserve the volume of Saudi Arabia’s oil sales, curb revenue for competitors, and discourage production of U.S. shale oil.

That’s because a further decline in crude oil prices would make some production in the United States unprofitable, preserving Saudi exports at the expense of American shale operations.

– Why The Saudis Are Cutting Oil Prices

So who is to be believed? Is it a conspiracy between the US and the Saudis to put pressure on Iran and Russia? Or does Saudi Arabia want to force US players out of the market?

Either way, the chart paints a dismal picture.

oil

Filed Under: Commodities Tagged With: commodities, crude

The Golden Rules of Trading

July 13, 2010 by Chad Butler Leave a Comment

Welcome to the exciting world of Futures trading; a class of markets that has become one of the most exciting and lucrative arenas for non-professional traders to get involved in. Futures markets have expanded from the better-known commodities such as Corn, Cattle, Sugar, etc, to products ranging from Currencies, Equity Indexes, Energies, and Debt Instruments. During that expansion options on futures have also become available. This plus the added environment of online trading and the hundreds of web sites devoted to futures trading (including this one) have attracted thousands of new participants in the trading of Futures. [Read more…]

Filed Under: FutureSchool Tagged With: futureschool, rules

Free Real-Time Streaming Quotes

August 9, 2007 by Chad Butler Leave a Comment

Looking for FREE real time market quotes? Look no further. This list contains links to real-time (not delayed) market data directly from the exchanges and markets. (Except for the CME quotes, these do NOT require registration, and none of these are brokerage sites.)

This post will be updated as additional sites are found. Bookmark it and check back for additional markets!

NEW and UPDATED to reflect the (newer) CME Group site!

[Read more…]

Filed Under: Resources

New Trading Articles

July 27, 2007 by Chad Butler Leave a Comment

I have had a fairly busy summer, but I’ve managed to get out three new articles this month. You can read them at the following links:

Cut Down Option Risk With Covered Calls [Investopedia]

Make Better Options Trades [Investopedia]

So You Want to be a Trader? [TraderSavvy]

Filed Under: FutureSchool

Using Option Spread Strategies to Trade Volatile Markets: Part 2

May 30, 2007 by Chad Butler Leave a Comment

[ Keep in mind that the specific trades referenced in this article were wprovided as educational examples from an article originally published April 14, 2006. They are not intended to be investment advice of any kind. For that you need to consult with a market professional who is familiar with, among other things, your investment objectives, your risk tolerance, and your available risk capital. Read part 1 here. ]

In this section we will discuss a couple of additional strategies, and also give a couple of examples in other markets. The two strategies that we have already discussed were the bull call spread and the bull put spread.

I hope you have a handle on the bull call spread (which together with a bear put spread, may be referred to as debit spreads) because we are going to take that concept one step further in the next example: a ratio call spread. Its construction is similar to the bull (or debit) call spread, but we sell more than one call. Typically, the perfect world example would be selling two out of the money calls and buying one closer to the money call. However, in our gold market example, to give us a reasonable (in my opinion) risk/reward ratio, we will sell three out of the money calls.   [Read more…]

Filed Under: FutureSchool

Using Option Spread Strategies to Trade Volatile Markets

May 26, 2007 by Chad Butler Leave a Comment

This article originally appeared in the April 14, 2006 edition of FutureSource FastBreak
You may view it here.

[ Keep in mind that the specific trades referenced in this article are provided as educational examples and are not intended to be investment advice of any kind. For that you need to consult with a market professional who is familiar with, among other things, your investment objectives, your risk tolerance, and your available risk capital. ]

This is Part 1 of a two part article. In this section, we will discuss a couple of useful, but often under-used, option spread strategies. Please keep in mind that these are examples to illustrate a point. They may not be appropriate for all accounts. All trading involves risk of loss, and you should consider that prior to entering any trade.

If you asked me five years ago if we would be talking about $800 gold, I would have said it was unlikely. But during the bull run in gold during the last few years, and especially the last 12 months, it has become increasingly more likely that we will eclipse the old highs. The question then is how can we trade this market?   [Read more…]

Filed Under: FutureSchool

Constructing Your Trading Plan

May 10, 2007 by Chad Butler Leave a Comment

This article was originally released as a followup to “My Super Secret Trading Technique” (which is now “Understanding Leverage“).

In part one of this article, we discussed the importance of money management as part of a good trading plan. We also had a brief discussion of how to adjust your risk exposure in the futures markets. Now, in part two, we will take that knowledge to the next level and discuss position size as it relates to your trading plan

Position size, while it may sound simple, is actually a complex topic. It is no secret that a great deal of the success of the Turtles is attributed to their mastery of money management, and more importantly, their ability to adjust position size appropriately. Even if you are a small account, able to only trade a one lot, you need to consider position size in your money management approach. Otherwise, how will you know when to increase size based on success, or hold off trading until additional capital can be raised.

[Read more…]

Filed Under: FutureSchool

Understanding Leverage

May 5, 2007 by Chad Butler Leave a Comment

This article originally appeared in the September 21, 2006 edition of Tradersmedia’s TraderSavvy Newsletter as “My Super Secret Trading Technique – Part I.”

Throughout my professional career, I have taught trading seminars and webinars, written newsletters and advisories, and generally spoken to a lot of people about trading. The most common topics people want to discuss are what indicators do I use and how do I time an entry. While these are important things to consider, they are not actually the end all and be all of trading. Probably the least common question is the question that I feel is most important: what about money management and risk?

[Read more…]

Filed Under: FutureSchool

The Holy Grail of Trading

April 5, 2007 by Chad Butler Leave a Comment

This article originally appeared in FutureSource FastBreak October 20, 2006

You may view it here.

Many traders spend a great deal of time trying to find trading’s “Holy Grail.” In this search, they move from one system to another, trying to find that one magic formula. Does the Holy Grail exist? There are a lot of frustrated traders that would tell you no. I, on the other hand, believe that it does exist. But I also believe that most traders seeking it are searching for it in the wrong place.

Too many traders, especially those lacking experience, focus on finding that one magic formula that will give them precise entry signals. What they fail to understand is that the trade entry is not as important as the exit. Here is an example that I have used in various seminars. We have two traders, one is short the market, and the other is long. They both offset the same day, same time, and same fill price. They both recorded a profit on their trade.

[Read more…]

Filed Under: FutureSchool Tagged With: futureschool

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