Crude Oil Futures volatility offers a "different market personality" than stock index futures. Here is some of the things you need to know about day trading crude oil futures:
By: Ilan Levy-Mayer, Cannon Trading Commodities Broker & VP
Crude Oil is one of MY favorite futures market for day trading. Before I dive in and share with you how the volatility in crude oil fits my risk tolerance for day trading and provide a couple of chart examples, we should review some of the specifications of Crude Oil Futures.
Crude Oil Futures have monthly expiration. So each month we trade a different contract month, so one needs to know when is the first notice day and last trading day for crude oil futures in order to always make sure we are trading the proper month with the most liquidity and avoid any chance of getting into delivery situation.
Next is the contract size. Crude Oil futures are based on 100,000 barrels. To be honest from a day trading perspective all I care is that each tick or 1 cent fluctuation is $10 against me or in my favor per contract. That means that a move from 92.94 to 92.74 = $200.
Another factor is trading hours. At the time I am sharing my thoughts with you, April 8th 2013, crude oil futures trade on the CME Globex platform and trade from 5 PM CDT until the next day at 4 PM CDT. That is 23 of straight trading hours. I definitely don't recommend day trading this market 23 hours...but it is good to know the trading hours.
Volume in crude oil futures is pretty good to trade in my opinion. Averaging about 300,000 contracts per day.
One last pointer to touch on is the API (American Petroleum Institute) report that normally comes out Wednesday at 9:30 CDT (on short weeks, holidays etc. , this report will be pushed to Thursday at 10 AM CDT). I tell my clients that this report is way too volatile and I like to be out 5 minutes before and not resume trading 5 minutes until after the report comes out. This report by itself deserves a writing but on short, the report provides information on how our stock pile is doing ( = supply/demand) and the market will move based on the numbers versus what was expected. Again as a day trader, your main job is to know about this report, when it comes out and in my opinion stay out of the market during this time...
Read the rest of the article along with chart examples, specific trade set ups and other trading tips which can be applied to many markets not just crude oil
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2. Hot Market Review - Grain Bulls failing mid summer
Jim has an excellent daily newsletter where he reviews different markets, alerts you for potential trades and much more. Included is his great bi-weekly newsletter with charts and a little longer term outlook. We recommend checking out his website, educational CDROM, and services at www.jimwyckoff.com Click on image below to enlarge
The grain market bulls' weather-inspired bubble is bursting this week as benign growing conditions over most of the U.S. Corn Belt have put the corn and soybean crops is pretty good condition--right during the time of summer when temperatures can be scorching, but are not. Extended weather forecasts for the region are also non-threatening. Weather patterns in the summer can change in a hurry, but right now the grain market bears are feasting while the bulls scramble to find footing. Serious near-term technical damage has been inflicted in the corn, soybean and wheat futures markets. See on the daily chart for December corn that prices appear headed below $4.00.
6:00 AM CDT - MBA Mortgage Purchase Index
8:00 AM CDT - FHFA Housing Price Index(May)
9:00 AM CDT - Existing Home Sales(Jun)
9:30 AM CDT - API & DOE Energy Stats
2:00 PM CDT - Dairy Products Sales
2:00 PM CDT - Cold Storage
7:30 AM CDT - USDA Weekly Export Sales
7:30 AM CDT - Initial Claims-Weekly
9:00 AM CDT - Leading Indicators(Jun)
9:30 AM CDT - EIA Gas Storage
3:30 PM CDT - Money Supply
FN: Aug Crude Lt(NYM)
9:00 AM CDT - New Home Sales(Jun)
2:00 PM CDT - Cattle On Feed
LT: Aug 2,5,10 Year Notes Options(CBT)
Aug Bonds Options(CBT)
Aug Canola Options(CBT)
Aug Corn Options(CBT)
Aug Wheat Options(CBT)
Aug Rough Rice Options(CBT)
Aug Oats Options(CBT)
Aug Soybeans,Soymeal,Soyoil Options(CBT)
7:30 AM CDT - Durable Goods-Ex Transportation(Jun)
7:30 AM CDT - Durable Orders(Jun)
* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.
** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.
*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!
RISK DISCLOSURE: Past results are not necessarily indicative of future results. The risk of loss in futures trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.