Please Help With Deviations

#1

Today was interesting day for me. Today was break even day for me today but could have been a very very profitable day on the almighty CL. Regardless of breaking even I am happily content with breaking even. Much better than losing.

But the reason why decided to discontinue trading is because the CL had already moved a full deviation by 8:29 AM and to my knowledge after price has moved a full deviation its unlikely to continue moving that direction.

Just got back from getting lunch and hitting the gym and opened my charts and to my amazement CL dropped $2.00 today. Of course this move was based off of fundamentals but I’m shocked at how the APEX system would have allowed anyone who knows the rules to catch a piece of the move.

According to Reuters due to a large ample supply of oil the prices on Oil Dropped $2.

BRENT CRUDE OIL FUTURES FALL $2 ON AMPLE SUPPLY | Reuters

This news allowed the CL to move a total of 2 full deviations today. But I’m need to some help when it comes to deviations…

Here are some questions that I have…

  1. What usually happens after price has moved a full deviation and what does that mean in regards to the condition of the market?

I ask this because the way I interpret it is that the market has moved the distance its going to move for the day and it will no longer move in large swings. I know my understanding is incorrect which is why I am seeking instruction.

  1. If price has already moved a full deviation before the floor traders come on board should one disregard trading for the day?

When the market has already moved a full deviation for the day I usually a bit cautious to trade because the moves have already happned

  1. Based off of experience how does price behave after it has moved a full deviation? Should one expect a range bound market? Is the market no longer tradable for the day?

Also any videos or posts in regards to how to use deviations is well appreciated.

Thanks for all the help!

#2

This is from a recent article and trade that DM placed on the radio the other day. “This gold trade took place on a unique day because the market had already blasted through deviation levels before the day started. When the market moves that much, you have to mentally say that level two deviation is the new level one deviation. When utilizing the Deviation portion of the chart, you would normally back off when it showed trading hitting about 80%, but because of the different deviation level, and having already blasted through a deviation level, you would back off when it showed 180-190%” Yes, usually we would hold off if a market has moved a full deviation. But if that market has moved a full deviation before US open it is possible for it to keep moving once we open up, especially if you are still seeing Volume. So at that point you could continue to trade it as long as you see volume, you may want to tighten stops once you see volume starting to drop or getting to a 1.8 Deviation level

#3

[quote=skeltonmark]This is from a recent article and trade that DM placed on the radio the other day. “This gold trade took place on a unique day because the market had already blasted through deviation levels before the day started. When the market moves that much, you have to mentally say that level two deviation is the new level one deviation. When utilizing the Deviation portion of the chart, you would normally back off when it showed trading hitting about 80%, but because of the different deviation level, and having already blasted through a deviation level, you would back off when it showed 180-190%” Yes, usually we would hold off if a market has moved a full deviation. But if that market has moved a full deviation before US open it is possible for it to keep moving once we open up, especially if you are still seeing Volume. So at that point you could continue to trade it as long as you see volume, you may want to tighten stops once you see volume starting to drop or getting to a 1.8 Deviation level[/quote]

Thanks a lot. This was very clear and informative. It gives me a more precise objective of what to do when price gets to these levels. Goes to show that there are still things that I am yet to learn. Thanks for the insight.