Monday, April 11, 2011
Where will the Price of Oil Go?
Nobody really knows where the price of a barrel of crude oil will go to. I find it amusing that people rely on what somebody says to determine a trading strategy. Once you expose yourself to the consequences of uncertainty by entering a trade then all you can do is manage risk and determine where you will take a loss if the trade goes against you or where you will move your stop if the trade goes in your favor. Yes if you are a longer term trader then you can gain expectancy bias by getting a win rate % that is positive by backtesting your datasets. Remember you can have a win rate % of 30% but if your average win is $3 versus an average loss of $1 then you still make money. Fundamentally if the Federal Reserve continues it's electronic money printing then commodities like oil will continue to move higher. This has been the case for the last decade on the average. I posted the dollar index chart and a chart of crude oil to illustrate my point. My guess is that oil will go back and retest its 2008 high of $147 a barrel. I believe oil will go even higher. The market will work this out on a daily basis and it will be reflected in price. A man's idea can't be quantified but price of a commodity like gold, silver, and oil can be. The trend is your friend and these commodities are all moving upward.