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Carbon Emissions

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The trend for Carbon Emissions has been strong over the past 12 months. The chart below clearly highlights this.

1311562923_CarbonEmissions_20180828_21_37.png.16272a126433205d472912d1da1901cc.png

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You trade the weirdest stuff - I love it! Gets me looking at new markets and there are some potential good trade ideas going on here. Stocks are all well and good but theres a lot of dumb money... you gotta probably have a better understanding of the fundamentals when trading carbon emissions you know what I mean? 

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@PandaFace, when trading trends it does not matter whether it is a share, fund, commodity, crypto, etc. If there is a strong trend then it can be traded regardless of whether it is a share or a commodity. 

For me the most important thing is the trend and it is irrelevant what commodity or share it is. When trend following shares I learnt that it does not matter how profitable the company is or how healthy the balance sheet is. The company could be doing badly but if there is a trend whether long / short then it can be traded. It is the trend that is important rather than the company itself and what it is doing.

In terms of trading Carbon Emissions, you are trading the trend. You do not need to be an expert on Carbon Emissions. I certainly am anything but. Yes an awareness of the fundamentals can only help gain a better understanding of the market you are trading and help with understanding why the trend is either on the long side or short. This can be resolved with a little bit of time and research. 

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At 13:21 UK time Carbon Energies is one of the best performing within the Energies sector. 

 

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Posted (edited)

An experience based prediction I would like to make is that there will be an almighty correction at some point so when there is a trend reversal then one must short and make profits on the way down.

However, until there is a clear trend reversal, one must not exit early or take profits early. One must continue to hold and add whilst the trend is in tact and ride the trend all the way up. 

Remember, let your winners run.

Edited by TrendFollower

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Carbon Emissions made a new high today as the chart below illustrates.

1417353772_CarbonEmissions_20180906_20_20.png.47b3556a26cf1ebec19d57b5cd90a8dc.png

 

It is one of the best performing commodities today that is offered on IG's platform as it went up by 150 points and 5% in the session today. Now add leverage and you can see why it is an attractive trade. This is where a trailing stop is extremely useful to ensure risk management is applied but aids profit maximisation in the trade. By monitoring the price action one should be able to identify the trend reversal in real time. Yes it is boring and time consuming but if you live and breath the asset you are trading in terms of price behaviour then it gives you an advantage when facing certain decisions that need to be made such as adding to the position or reducing the position size. Also amending any stop losses, etc. 

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Good article for those looking at getting up to speed with this specific asset. 

https://www.ft.com/content/6e60b6ec-b10b-11e8-99ca-68cf89602132?segmentId=a7371401-027d-d8bf-8a7f-2a746e767d56 

"The opportunity for traders in a market that had languished due to a surplus of credits built up during the financial crash and eurozone crisis, was only spotted by a handful of carbon specialists who had stuck with the sector during its prolonged slump, giving them the opportunity to reap large profits."

2018-09-07 12_03_16-Hedge funds and Wall St banks cash in on carbon market’s revival _ Financial Tim.png

We'll be doing an article on this next week. I'll be sure to cross post it here. 

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@JamesIG, thanks for this. Your post supports this thread nicely.

Carbon Emissions went up 8.15% yesterday and 175 points. Add leverage to the mix and this is one of the best performing trades at the moment. It is also one of the best performing investments over the last 12 months.

998463971_CarbonEmissions_20180908_10_23.png.435def95c6577e02c9cf62ce50512fee.png

The trend is very strong and bullish. It is making new highs and is trading above its 20, 50 and 100 day moving averages. 

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Two linked stories here methinks;

Holger Zschaepitz @Schuldensuehner   Jul 31

"Good morning from Germany where power prices at the EEX have hit fresh YTD highs despite incredible 'hundred year summer' w/record length & intensity of sunlight exposure in another sign that Germany's Exit from nuclear and fossil-fuel energy (so called Energiewende) has failed."

 

Ole S Hansen @Ole_S_Hansen   Today

"The European gas and power markets remain on fire. EU Carbon has jumped 22% in just three days with Equinor saying a price >€30 is needed to boost gas switch. Winter gas now exceeds last years 'Beast from the East' spike. Strong Asian demand diverting LNG away from Europe."

pw2.PNG.53754cbfd9ff33d0dd1ed5de719d0120.PNG

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Remember let your winners run. Do not exit too early until there is a clear signal of a trend reversal. The article below is very interesting.

Carbon Options Signal 20% Gain as Europe Nears Record Price

https://www.bloomberg.com/news/articles/2018-09-10/carbon-traders-bet-on-rally-going-much-further-options-show

I think there will be an almighty shorting opportunity on Carbon Emissions in time to come. 

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'Omph', that was a bit of a jolt, not sure what's going on there. Carbon breaks down.

1827791146_CarbonEmissions_20180913_14_55.png.e20227e8fa28a50c348e2c0c1aff392d.png

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Ahhh the well know german Nordic power market differential 😂😂😂

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I did say in my last post that there was an almighty shorting opportunity in Carbon Emissions and boy as it come and come quick. 

At the time of writing it is down some 394 points and around 17%!

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I got hurt by it today, but reversed it and shorted it.
Found 0 fundamental news as to why it dropped (when it was happening, now it's a different story*).


I'll be more careful trading markets that I know very little off.
Incredible that a Norweigan trader got wiped out apparently.

Edited by zala

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3 hours ago, PandaFace said:

Ahhh the well know german Nordic power market differential 😂😂😂

Could you please elaborate?

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Interesting, still not much news wise but at start of week Norway set out to keep it's share of supply to Germany with Natural Gas in the face of completion from Russia taking a bigger chunk with their new (second) pipeline into Europe that Trump was complaining about. Germany is the biggest market for NG in Europe so suspicions are that Norway has started a price war lowering the cost of NG and so the carbon emissions price has dropped as a consequence.

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@zala, one assumes that there was a lot of speculative money in Carbon Emissions. This may be a reason why you cannot find any fundamental news to support or explain the drop. 

I think one must hold their short position until there is a clear exhaustion of downward movement or clear trend reversal back to the long side. 

Also what happens when speculators start to close their positions is that it triggers stop losses. The speculators then as a result start shorting. This again triggers more stop losses. This effect amplifies the drop and the chart clearly shows a sharp correction. It may continue tomorrow and the days after as more shorts trigger more stop losses which encourage those very same people to short as well. 

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1 hour ago, TrendFollower said:

@zala, one assumes that there was a lot of speculative money in Carbon Emissions. This may be a reason why you cannot find any fundamental news to support or explain the drop. 

I think one must hold their short position until there is a clear exhaustion of downward movement or clear trend reversal back to the long side. 

Also what happens when speculators start to close their positions is that it triggers stop losses. The speculators then as a result start shorting. This again triggers more stop losses. This effect amplifies the drop and the chart clearly shows a sharp correction. It may continue tomorrow and the days after as more shorts trigger more stop losses which encourage those very same people to short as well. 

Reminds me of Soros theory of reflexivity

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@zala, I can see why it would remind you of this.

Now think what if the very people whose stop losses were being triggered after holding a long position are the same people who short to trigger the next move down and the subsequent stop losses. What if this is pre-planned? What if this behaviour is to help maximise profits for these people who may be speculators both on the uptrend and downtrend?

Add to the mix not necessarily individual traders but institutional positions and capital. Then add 'algo' trading where machines are executing such trades based on a set of parameters. Then one could begin to see how such sharp moves down could occur in such a short space of time without any fundamental news to support it.

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5 hours ago, TrendFollower said:

@zala, I can see why it would remind you of this.

Now think what if the very people whose stop losses were being triggered after holding a long position are the same people who short to trigger the next move down and the subsequent stop losses. What if this is pre-planned? What if this behaviour is to help maximise profits for these people who may be speculators both on the uptrend and downtrend?

Add to the mix not necessarily individual traders but institutional positions and capital. Then add 'algo' trading where machines are executing such trades based on a set of parameters. Then one could begin to see how such sharp moves down could occur in such a short space of time without any fundamental news to support it.

FX-markets are manipulated on daily basis via stop-hunting. Institutions drive prices higher or lower depending on how much orders they need to fill for their own needs as the magnitude of the contracts they possess or need to acquire is too large, and the bigger chunks are around certain price levels.

So institutional traders do manipulate them daily due to their large volume. A friend of mine sits at the AEX directly, and could move crude-oil with 5-7 contracts and make it move 3-4 ticks.

Eventually they threatened him with calling the SEC etc.

The bigger boys seldomly experience these type of repercussions.


 

Edited by zala

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@JamesIG, Thanks 👍

@PandaFace, it is but quite funny too. 😁 You may ask why funny? Funny because IG are reactive rather than proactive. The Carbon price action and big move lasted around 12 months and there was nothing from IG. When I got time I started a post to bring awareness to the IG Community. Now IG could respond and say as it was a big article and so it took them a long time. Had they posted this earlier then those that were not aware of the price trend could have traded Carbon Emissions. By the way the short is on right now and there may be a further uptrend (more upside) in the time ahead if what is reported is true and accurate.

I ask why it took IG 12 months to post something on Carbon Emissions when clearly it was one of the best performing 12 month trends in Commodities? I would have been impressed if this article had been posted within a month or three of the trend starting. These are full time analysts that work for IG and get paid. 

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