The update I am posting on July 2019 is to add a couple of pointers that may assist those who are trading crude oil futures, looking to trade or day-trade crude oil etc. What makes Crude Oil futures attractive for me in terms of day trading is the fact that fear and greed are intensified in this market. That creates a ground for spikes, sell offs and many times a volatile, two sided type of trading range. I have also seen big moves happen in crude oil futures VERY FAST.
Crude oil entered a new and powerful uptrend in 1999, rising to an all-time high at $157.73 in June 2008. It then dropped into a massive trading range between that level and the upper $20s, settling around $55 at the end of 2017. Retail’s influence rises when crude oil trends sharply, attracting capital from small players who are drawn into these markets by front-page headlines and table-pounding talking heads. The subsequent waves of greed and fear can intensify underlying trend momentum, contributing to historic climaxes and collapses that print exceptionally high volume. Price action tends to build narrow trading ranges when crude oil reacts to mixed conditions, with sideways action often persisting for years at a time. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.
Conclusion – Crude Oil Trading Strategy
With a narrow, almost imperceptible spread, traders open trades in different directions when this spread diverges. Trading hours will vary depending on the exchange and the type of oil contract. Trading hours of futures and options on the ICE exchange are determined by stock exchange hours. If traders purchase a CFD in Forex, they can trade oil 24 hours a day, five days a week. Oil ETFs are common exchange-traded funds that invest in oil companies.
For this reason, I often use this pattern when trading oil. To do this, it is not necessary to enter a commodity exchange and make transactions with physical delivery. Electronic exchanges such as Forex allow traders to trade CFDs. Also, major stock exchanges in any country in the world provide the opportunity to trade futures or options and invest in ETFs. Many novice oil traders often have a question about where to trade oil futures.
How to Trade oil
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Finally, let’s take another look at how all the plotted risk/reward trades look on the H1 chart. Only enter a trade if a gap forms at a given support or resistance, confirming the expected bounce from that zone. Trade entry was always at the upper edge of a bullish gap or the lower edge of a bearish gap.
Swing strategies are not the only trading approaches suitable for price action trading. Intraday or even possibly scalping strategies can work with price action methods as well. When used in live market conditions, SRs provide the day trader with exact price points they need to be aware of. Also, they are great for market entry/exit and open position management. Finally, SRs may be easily integrated with other crude oil day trading indicators.
Oil and natural gas correlation
Once the first test has occurred, this line is terminated. The second part of our mini-series of articles will show you how to trade oil intraday. This is a more advanced approach to trading oil, but one that even novice traders can learn.
- Explore the fundamentals of modern energy markets, which can have a significant impact on many of the world’s leading economies.
- The amount of capital you need in your account to day trade a crude oil futures contract depends on your futures broker, but you can expect a minimum of around $1,000.
- Intraday or even possibly scalping strategies can work with price action methods as well.
- A teacher with 8 years of experience and the author’s methodology.
Fundamental crude oil day trading indicators can help traders manage periodic volatility and align their strategies with broader trends. These are vital elements for aligning risk to reward successfully over the long haul. What I personally look for when day trading crude oil futures is exhaustion in buying/ selling and extreme overbought / oversold conditions. Another way to day trade crude is through a fund that trades on a stock exchange, such as the United States Oil Fund (USO).
The CCI indicator can spot in advance when an Oil cycle has ended or when a new one has started.