How to Turn $ 5,000 into a Million by Heikin Ashi Trader

Author:Heikin Ashi Trader [Ashi Trader, Heikin]
Language: eng
Format: mobi
Publisher: amazon
Published: 2020-03-28T21:19:13.582907+00:00

It is well known to every trader, that the price of oil is an important factor on the world stage. It is therefore essential that you keep an eye on it, as well as on other important indicators, such as the dollar or the yield curve of US government bonds. Whenever capital is withdrawn somewhere, and flows to another place, it is often because something important is happening in one of those indicators.

Image 13: Oil price, monthly chart 2003 - 2019

Between 2007 and 2008, the oil price was in a spectacular bull market (an excellent chance to make a fortune, by the way). After rising to over USD 140 a barrel, the price plunged below USD 40 a barrel, after the financial crisis. It was an unprecedented crash that took just six months (again an excellent opportunity to make a fortune with short positions). Between 2009 and 2014, the oil price recovered and reached a price of USD 100 again. Then all became quiet. Oil seemed to stabilize at that level. Technically speaking, it formed an extended symmetrical triangle. If you ask me, this is not a very reliable technical pattern. There were smaller breakout attempts to the upside, all of which failed. I was already lurking in the shadows, because I assumed that oil would eventually break out to attack the highs of 2008. However, this did not happen, and the price continued to go sideways at around the USD 100 level in the first two quarters of 2014.

And as so often happens on the stock exchange, when the expectation of market actors (including myself) is not fulfilled: the opposite happens. Oil broke out of this sideways pattern on the downside in the summer of 2014. The crash was not as spectacular as in 2008. But still, a slide from USD 100 to USD 27 is spectacular. That’s a loss of value of 73%!

I have to admit that I was completely surprised by this crash. Once again, I had been deceived by my expectations. The price of oil just had to rise, because “the world” needed more oil and the supply was becoming scarcer (I thought). I could just watch the oil price going down day by day. That is what you have to deal with when you have certain expectations, and then the opposite happens. You can only stand on the sideline and watch. But it got even worse. I did not get in (not even with a small test position), because I assumed it was a false breakout. I expected the market players to suddenly take a 180 degree turn. In the end, this did not happen. It was a real breakout, and the price of oil continued to fall.

Of course, the analysts were soon on the spot with their explanations. There was more oil than everybody thought! How interesting! As if this oil had not existed in 2012 and 2013, when oil was stable, at above USD 100 a barrel. The second explanation also seemed obvious. This time the Americans, more specifically the shale oil boom, had caused the price collapse.

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