A naturally found substance, crude oil is also one of the most traded commodities. It is crude oil that is further refined so as to make petroleum products. Just like with every other commodity, crude oil too has its specific ticker symbol, contract value and margin.
The margin is variable as it keeps changing as per the volatility in the market as well as according to the current value of the contract. If you are interested in crude oil trading or are already trading in this commodity, it is important for you to know that over the past 50 years the price of this commodity has been denominated in U.S. Dollars.
At Cannon Trading we help you trade crude oil at some of the best day trading margin rates. Our brokers will do their best to keep you aware of the market happenings to help you exercise call and put options carefully. In order to get more information on crude oil and commodities, read this category archive blog. Please feel free to share this information.
Trade management is more important than Market Analysis….
Trading 201: Day Trading Crude Oil futures
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 1000 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.
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Elliott Wave International’s Chief Energy Analyst tells you what he sees next for crude
By Elliott Wave International
In this new interview, Steve Craig, editor of Elliott Wave International’s Energy Pro Service, shows you what extreme readings in some of his market indicators mean for crude from here. Watch this interview now for a unique take on this key energy market.
This article was syndicated by Elliott Wave International and was originally published under the headline (Interview, 4:58 min.) Crude Oil: Will the Decline Continue?. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
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Many ways to trade any market, many ways to lose money in any market and only very few ways to lock in gains. If you need help creating a trading plan, visit our broker assist services.
Time sure does tick a bit different in the commodities and futures world….
Some traders know time has passed quickly when it is time to change to the Sept. contract versus the June contract ( like we are doing with BONDS right now), others may notice it when they think “wow, monthly unemployment is next Friday, time sure flies…” and still other traders, perhaps professionals and money managers notice it when one month ends and another starts and it is time to share monthly results with their clients…..
Either way you look at it, hope June will be a great trading month!
Today I want to share a couple of market behaviors with you, I have noticed in the past.
The first is US Bonds trading behavior on the last trading day of the month on the last 15 minutes of the old pit session, i.e. 13:45 to 14:00 central time.
While I did not spend any time trying to predict the direction of the move, I seen it many times, the bonds will make a 10-15 ticks ( 15 tick in bonds = $500 per contract) move during the last 15 minutes as large traders position themselves ahead of months close.
Some what of a sell off today although the market bounced pretty good of the lows before the close.
Volume has been very low this past 2 months. take a look at the chart below and see how volume has been consistently below its 12 day moving average since mid March.
I must admit indices have been hard to trade, at least for me personally. I have been having more luck with bonds and Crude oil than the mini SP and mini Russell. I hope that volume and volatility like today will return sooner than later to stock index futures.
Daily Heiken-Ashi chart of the mini SP below for your review along with potential targets above and below:
EP – E-Mini S&P 500, Equalized Active Daily Continuation:Heikin-Ashi
I wrote before on how certain markets experience big moves on certain reports. One of the obvious ones is the crude oil inventories, weekly report, Wednesday at 7:30 AM pacific time. There are many others and tomorrow e have a few coming.
One of the reports today was existing home sales at 7 AM pacific. The market expected/ forecast was for 5.04 mil home sales, the actual number came out at 5.19 mil sales. The result was continued sell off in bonds and a strong trend day lower.
I am sharing with you my intraday 15 minute bond chart from today along with two sell signals that took place about an hour before the report. See below if you like a free trial.
Custom USA – 30yr US Treasury Bonds(Globex), Equalized Active 15 min Continuation
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GOOD TRADING
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The first is what I call the “trend is your friend”. A trader looks at few different time frames, looking to see if there is an established trend on longer time frame ( example 60 minutes chart) and then trying to look for pull back on lower time frames and “join the trend”. Only works for certain markets and only works few times of the month as most days markets do not have an intraday trend in my opinion.
Second method is what we call break out. Traders will look for markets that have been in a lower volatility situation using indicators such as ADX for example. Then they will look at the chart to find what they feel are levels that if broken can fuel a stronger move in the same direction. These levels can be extracted visually looking at the chart or using highs/ lows of X periods. This method works better on some markets than others. I noticed that crude oil and gold futures tend to have better chances of a continued breakout move than the mini SP 500 for example.
One of my favorite markets for day trading is crude oil. Actually not this month… it has taken way too much money out of my system… but normally it is. I like the fast action and some of the set ups both fear and greed present in this market.
Tomorrow is 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.
Observe crude oil futures tomorrow during the time of report to get a feel.
If you never traded crude oil futures before, observe for a bit and try doing so in demo mode first.
I wrote an article about this topic, you can access at:
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.
