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Category: Energy Futures

FOMC Minutes, Crude Oil Inventories + Futures Trading Levels 8.17.2022

Posted on by Ilan
Get Real Time updates and more on our private FB group!
Busy Wednesday tomorrow as traders will listen closely and try to analyze the FOMC minutes of the last FOMC meeting. Before that retail sales numbers will be watched closely as well.
9:30 AM Central time we will have crude oil numbers in a volatile energy sector.
Did you know that the MICRO crude Oil contract is trading with good volume?
At times when volatility is high, it is not a bad idea to consider the smaller, 1/10th the size micro CRUDE Oil contract.
December Coffee is front month.
Sierra Charts Teton Order Routing demo

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.

Futures Trading Levels

08-17-2022

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Get access to proprietary indicators and trading methods, consult with an experienced broker
 1-800-454-9572 Explore trading methods. Register Here


Economic Reports, Source: 

Forexfactory.com

 

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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 here in 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 judgement in trading.

Micro Crude Oil + Trading August 9th Futures Levels

Posted on by Ilan
Get Real Time updates and more on our private FB group!

Crude Oil Trading Updates, Opportunities and Risks:

By John Thorpe, Senior Broker
Have you had an opportunity to trade the financially settled Micro WTI Crude oil contract? I have and this contract is just what the doctor ordered. When you are faced with the high price and volatility we have seen over the past few years you won’t have to make a decision to either be out or be in the WTI Crude oil contract where we have seen $10,000.00 daily price swings.
With the Micro, which is one tenth the size of the 1000 barrel WTI Crude contract or 100 barrels only, each dollar move per contract in the price of Crude oil is $100.00 rather than $1000.00. What this allows you to do is adjust the amount of leverage you want and not expose yourself to the volatility of the larger CL contract.
The symbol is MCL U22 for the current September contract.
According to the CMEGroup, 33,000 unique traders have come to the CME to trade this contract since it was listed a year ago. The CME Group declares traders from over 145 countries trade the Micro crude oil contract and traders from over 33 countries have traded the new Options contracts on the Micro Crude contract.
Transaction Costs are inexpensive for this contract as exchange fees are .50 per contract.
As always, plan your trade and trade your plan. Please contact your broker or Cannon Trading with any questions.

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.

Futures Trading Levels

08-08-2022

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Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker
 1-800-454-9572 Explore trading methods. Register Here


Economic Reports, Source: 

Forexfactory.com

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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 here in 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 judgement in trading.

Natural Gas New Highs & Futures Support and Resistance Levels 5.26.2022

Posted on by Ilan
Get Real Time updates and more on our private FB group!

The State of Affairs in Energy Futures

by Mark O’Brien, Senior Broker
In recent weeks, we’ve seen declines in global equity markets as well as in consumer and investor sentiment. We’re on the leading edge of a near 8-month rise in inflation to 40-yr. highs – rising at an equal 40-year record pace.
At the same time, some of the latest global inflation data has been inconclusive. Short-term inflation momentum which measures a three-month annualized rate as opposed to the pace of price increases in one month compared with the same month a year earlier (think CPI) have started to soften. The Commerce Department’s monthly personal-consumption expenditures report has shown consumers are shifting to a more-normal balance of spending on goods and services compared to the demand surge earlier in the Covid-19 pandemic.
Regardless of how conditions play out in the coming weeks and months, don’t count on energy prices falling off any time soon. Nationally and globally, even if we experience an economic decline and energy demand subsides, the aftereffects will be slight. Both the supply and demand sides of the equation will account for stubbornly high prices both at the pump and in natural gas. Strategic stockpiles are in need of replenishing, the expanding ban on Russian imports is only beginning to impact prices, structural adjustments to realign energy supply chains to accommodate for the war will take months or longer and seasonal summer demand is on the horizon.
EVEN BETTTER…reach out to a Cannon Trading broker.
Good Trading!
Natural Gas Monthly Chart

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.

Futures Trading Levels

05-25-2022

Futures Support and Resistance Levels 5.26.2022

 

 

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker
 1-800-454-9572 Explore trading methods. Register Here


Economic Reports, Source: 

Forexfactory.com

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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 here in 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 judgement in trading.

NASDAQ Futures Down 3% + Futures Trading Levels for 01.06.2022

Posted on by Jenny Collins
Pass the Knowledge – Feel Free to Forward to a Friend!
Get Real Time updates and more on our private FB group!
Hello Traders,
Happy and prosperous New Year from the Cannon Trading Team!
We appreciate the chance to serve your futures trading needs and are here to assist.
FOMC Minutes report triggered one of the larger sell offs we have seen in recent months. NQ and RTY were both down over 3% when the trading day was over.
Hope it helps.
*While I have no idea were the market is going from day to day, minute to minute, week to week etc. I do know that in the past, some of the sharpest and largest rallies were short covering after a large sell off. More often than not market sell offs and volatility like we are seeing do not end up as V type of action but more like U or W when it is all said and done.
*Expect the unexpected…
* Have an idea of what you are looking to do, keep in mind possible risk and have a game plan. Now more than ever, plan your trade and trade your plan!
* Think money management, hedging risk while you are still trying to figure out how to profit.
* Know what is going on, reports, current margins, current limits and more.
*Consider short term options instead of futures and/or MICROS
*Trade smaller. The bands are much larger. Watch the VIX.
* DO NOT assume anything…if you are not sure, contact us and we will try our best to assist with the combined, vast experience we have here as a team.
* Wash hands, take this seriously and do your best to stay healthy….
My colleague, John Thorpe, Ex floor broker, contributed the following on the VIX and the VVIX:
“We recommend all stock indices intraday traders to keep an eye on the VIX for directional clues and study, many of you have access through other means to view this critical trading barometer, VIX now trades 5 days per week ,23 hours per day. if you need to add the VIX data to your trading platforms , it’s 3 bucks per month, penny wise and pound foolish if you don’t. Contact your broker on how to add the Volatility Index traded through the CBOE to your trading platform.”

Futures Trading Levels

01-06-2022

Support & Resistance Levels For 01.06.2022


Economic Reports, Source: 

https://bettertrader.co/ 

BetterTrader Reports 01.06.2022

 

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.

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 here in 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 judgement in trading.

Energies Insight w/ OPEC and Futures Support and Resistance Levels 01.04.2022

Posted on by Ilan
Get Real Time updates and more on our private FB group!

Happy and prosperous New Year from the Cannon Trading Team!
We appreciate the chance to serve your futures trading needs and are here to assist.

Energies Insight by John Thorpe, Senior Broker

O.P.E.C. will make a decision on output policy for February when they meet tomorrow. Please expect and prepare accordingly in the early A.M. and anticipate additional volatility not only in the energy markets , CL, NG, RBOB and Heating oil but also in the Equity indices ES, MES, NQ, MNQ, YM, MYM, RTY , and food markets as OPEC will be meeting in Vienna at 8a.m. EST (1 p.m. Central European TIme zone ) in light of the current restrictions and challenges related to the COVID-19 pandemic, please find the expected hours of release useful. Will their decision add to the existing inflationary concerns or will OPEC concede it’s output tightening instituted in 2020 has run it’s course and agree to raise it’s output limits in a measured approach or more substantially? The bond market has taken a nose dive in recent days and interest rates are expected to rise , tightening credit, Metals have also sold off in anticipation of easing inflationary pressures. Manage your risk well this week.
1. The 36th JMMC Meeting is scheduled to take place on Tuesday, 4 January 2022, at
13:00 (CET) via videoconference.
2. On the same day, 4 January 2022, the 24th OPEC and non-OPEC Ministerial Meeting
is slated to convene at 14:00 (CET) via videoconference.

 

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Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.

 

Futures Trading Levels

01-04-2022

Futures Support and Resistance Levels 1.04.2022


Economic Reports, Source: 

https://bettertrader.co/ 

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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 here in 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 judgement in trading.

Crude Oil Futures Market Review and Daily Chart Analysis & Support and Resistance Levels 11.18.2021

Posted on by Ilan

Dear Futures Trader,

Get Real Time updates and more on our private FB group!

Crude Oil Futures Market Review and Daily Chart Analysis

Looking at both price and time FIB analysis, on the daily crude oil chart below (click here for LARGE IMAGE) I am showing a potential for crude oil to find support and have a short term reversal to the upside. I wont fight the short term trend and will look for a buy signal using 30 minute chart before I jump in front of this downward train…
What do I mean by that?
Daily chart still showing a good strength on the LONGER term scale ( see both Elliott Wave counts and trend strength). Short term we can see the strong sell of the highs made towards the end of October.
I ran both a Fibonacci retracement on prices from lows to high, as well as Fibonacci TIME retracement from the time of lows to highs to see the next TIMING window to look at.
We are getting close to a match on both time and price ( concept I was made aware of by Carolyn Boroden Strategies for Intraday Trading Fibonacci Retracements | Fibonacci Queen) so I will now look for a bullish trigger in the form of MACD cross over on the 30 minutes chart or possible turning up of RSI on the 30 minutes chart before simply trying my luck…..
As always the key will be risk and trade management if/when set up happens.
Keep in mind FRONT month for crude oil is now January! CLF22
If you are looking for other reference material please contact your Cannon Broker for lists of solid, informative and helpful trading tomes
Crude Oil Futures Daily Chart

Good Trading

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.

 

Futures Trading Levels

11-18-2021

Support and Resistance Levels 11.18.2021

 


Economic Reports, source: 

https://bettertrader.co/ 

BetterTrader Economic Indicators 11.17.2021

 

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 here in 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 judgement in trading.

Natural Gas, Crude Oil, Stocks and Rates, Support & Resistance Levels 10.05.2021

Posted on by Jenny Collins

Dear Traders,

Get Real Time updates and more on our private FB group!
Separator
Natural Gas, Crude Oil, Stocks and Rates
They all work together with a strong relationship. At times with direct correlation, at times with inverse correlation.
Do some homework, overlay some charts, look for clues that can help you while trading and provide even the smallest edge.
Natural gas, Crude oil have been on a bullish stretch lately. See a weekly chart of Natural gas below.
Other commodities like cotton and oats are also experiencing strong bull runs – is this due to in inflation? Supply chain fears? New “COVID world” environment?
Current levels to watch for on the major markets mentioned above:
Nov. Natural Gas:
Pivot 5.72
Support 5.14
Resistance 6.80
Nov. Crude Oil:
Pivot 74.72
Support 74.02
Resistance 79.25
Dec. 30 year bonds:
Pivot 161.12
Support 158.22
Resistance 164.02
Dec. Mini SP500:
Pivot 4437.00
Support 4251.00
Resistance 4540.00
Natural Gas Weekly Chart Cannon Trading

Futures Trading Levels

10-05-2021

Support & Resistance Levels 10.05.2021
Did you know?
Cannon offers over 10 TRADING PLATFORMS CLICK HERE for a demo

Economic Reports, source: 

 www.BetterTrader.co

Better Trader Report 10.05.2021

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 here in 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 judgement in trading as well as options on futures.

October Natural Gas Rally and Review & Support and Resistance Levels 9.16.2021

Posted on by Ilan

Dear Traders,

Get Real Time updates and more on our private FB group!
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Wednesday Sept. 15th insight by Mark O’Brien, Cannon Senior Futures Broker:

Market Insight: Natural Gas

In just three weeks of trading (Aug. 25-today), Oct, natural gas has made a massive ±$1.50 rally ($15,000 per contract), doubling in price from a year earlier reaching prices not seen since early 2014. Yet, at ±$5.50 per million British thermal units (MMBtu), natural gas prices are a fraction of that in Europe and Asia where prices have approached $18.00-20.00 MMBtu! The fundamental bases for these high prices: the U.S. is behind schedule stocking up for the winter. At the same time, it’s an important exporter to Europe which is in its own precarious supply situation with storage for winter ±16% below its 5-yr. average.
What’s next for prices depends largely on what kind of winter is in store for the U.S. and Europe and the degree to which U.S. producers can ramp up on storage. Catching up on the 5-yr. average build-up will be closely monitored.

Daily Chart below

Important: Trading commodity futures and options involves a substantial risk of loss.
The recommendations contained in this letter are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
Natural Gas Futures Chart
Good Trading

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.

 

Futures Trading Levels

9-16-2021

Support and Resistance Levels 9.16.2021

 

Futures Trading And Commodity Trading Daily Insight and Information via Facebook group
Did you know?
Cannon offers over 10 TRADING PLATFORMS CLICK HERE for a demo

Economic Reports, source: 

 www.BetterTrader.co

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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 here in 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 judgement in trading as well as options on futures.

10 Key Questions on Measuring Your Trading Progress, Crude Oil Chart Review & Support and Resistance Levels 5.21.2021

Posted on by Ilan

Dear Traders,

Like us on FaceBook!
Get Real Time updates and more on our private FB group!

10 Key Questions on Measuring Your Trading Progress, Success

At some point in nearly everyone’s trading timelines, they wonder how their trading successes (or failures) compare with those of other traders. Wondering just how well you stack up to other traders in the industry is a natural curiosity and a human psychological tendency. However, actually knowing the success or failure rates of others doesn’t do a lot to move you farther down the road of where you want to be regarding trading success.
Most traders also wonder about the success rates of the “professional” traders—the ones who make their living solely by the profits they generate from trading. I will provide you with an answer to this question at the end of this feature.
Below are 10 questions regarding measuring your own trading progress and success. These questions should help you determine where you stand in this challenging field of endeavor.
1. What is trading “success?” This is a most basic question. Most would agree that ultimate trading success is defined as being profitable at trading—making more money than you lose. There are other secondary factors that also define success in trading, such as finding a “balance” between trading and other life activities. But it’s being profitable at trading that is the benchmark of defining success.
2. What is trading “progress?” Beginning traders should not expect to have immediate and ultimate success trading futures, stocks or FOREX markets. What they can expect in the early going is to make steady progress through gaining knowledge and experience. Even veteran successful traders continue to make trading progress. Achieving and maintaining trading success requires continual progress—namely continuing to seek out trading and market knowledge. Traders who truly enjoy the “progress” and process of trading do have a significant trading edge over those who do not enjoy learning and gaining experience.
3. At what point in my trading timeline should I expect trading “success?” Trading success (winning trades) can come right away—even for the beginning traders. What is less likely for the inexperienced traders is sustained trading success. Beginners can even run into a “hot streak” that skews the overall reality of trading. Immediate (and likely fleeting) success for a beginning futures trader can do longer-term psychological harm—if he or she does not fully recognize and understand the hard work and perseverance required on the road to trading success. Many times I get questions from less-experienced traders that go something like this: “I’ve been trading two years and I’ve only been able to about break even.” My reply to them is, “Hey, you should not be too discouraged with those results. Many traders don’t have that kind of success in the early going.”
4. How long will it take to go from being a less-experienced trader to an experienced and hopefully successful trader? Determining a precise timeline at which trading success will arrive will vary greatly among traders. Some beginning traders will spend nearly full time coming up to speed. Others may spend an hour or two a week on the subject. There is no right answer on how much time to spend studying trading and markets. I have many readers who are taking up trading in retirement. I have a few that have taken up trading over the age of 80 years. One is never too young or too old to learn about markets and trading. A general rule would be for a beginning trader not to expect sustained trading success within a few months. More likely is a timeframe of a few years to achieve sustained trading success. Now you see why money management is so important in futures trading. You have to survive before you can succeed!
5. When should I “throw in the towel” and admit that trading is not for me? There is no one right answer to this question. If trading is making you miserable and creating other bad habits (kicking the dog), then it’s time to quit—or at least take an extended break. If you do not have the financial resources to trade futures, then you should not participate. Futures trading should be conducted only with money a trader can stand to lose, without impacting other more important obligations, such as grocery and rent money. It is important to point out that the beginning futures traders who “flame out” first are usually the ones who did not have the financial resources to trade futures in the first place.
6. Am I still hungry for trading and market knowledge? One should never stop endeavoring to gain more knowledge about markets and trading. Even the successful veterans who’ve been in the business for many, many years will say that they are still learning on a daily basis. If you are still striving to learn more about this business–and are enjoying doing it–then that’s a positive signal.
7. How many trading losers should I absorb before I change my trading plan of action? This is a real tough one to answer. Again, there is no single right answer. However, if you believe you have a well-founded and thoroughly researched trading plan of action, don’t abandon it just because you are on a losing streak. All traders have winning and losing streaks. That’s a part of trading. Traders enjoy the winning streaks and do not enjoy the losing streaks. But during the losing streaks they forge ahead, knowing that their plan of action is still solid. Trading plans can certainly be tweaked, such as trading fewer contracts or trading less frequently during a losing streak. For most traders, a complete overhaul of one’s trading plan is probably a last resort that merits much consideration.
8. How can I keep myself motivated on the winding road to trading success? Traders who enjoy the entire process of trading don’t really need a lot of motivational help because they are already fascinated by what they are reading and learning. But during a losing streak or some other “dry spell” in trading—when morale can slip—it is prudent to read some trading books that are based less on specific methodologies and more on trading psychology. Attending trading seminars is a great way for a trader to become reinvigorated. (And it’s also a great value to those already invigorated!) You not only will gain fresh trading and market knowledge, but you also will get to see and speak with the seminar lecturers as well as traders who are in the same position as you.
9. How much should I listen to other traders when trying to evaluate my own trading progress or my own trading plan? It is good to have a trading partner or “buddies” with whom to share your ideas and to discuss markets and trading. The learning curve improves when a trader has another trader or traders with similar experience with whom to share ideas. It is also beneficial to have an experienced mentor to help guide you through the “rough waters” that all traders experience at times. But at some point, most traders do want to be more or less autonomous in their decision-making. As many traders gain more experience, knowledge and confidence, they will use outside influences as “second opinions” to reinforce or provide another angle to their own sound opinions. Many traders also have full-time “day jobs” and need outside sources to help save them time and to keep track of what’s going on in all the markets.
10. What is the average success rate of the “professional” trader? I have not seen any “official” studies of the percentage of winning trades of the average professional trader. However, it is generally agreed upon by many in our industry that the better professional traders have a winning percentage of around 4 out of every10 trades—or a 40% winning percentage. Breaking this down even further, it is estimated that half of the winning trades are only small winners and not much better than break-even. Thus, it can be loosely extrapolated that most of the professional futures traders make most of their money on one or two trades out of every 10. This only underscores the importance of sound money management in futures trading—namely cutting losses short and letting winners run.
That’s it for now. Next time, we’ll examine another important issue on your road to trading success.
Jim Wyckoff is the proprietor of the analytical, educational and trading advisory service, “Jim Wyckoff on the Markets.” He has a website at www.jimwyckoff.com
Important: Trading commodity futures and options involves a substantial risk of loss.
The recommendations contained in this letter are of opinion only and do not guarantee any profits.
Past performances are not necessarily indicative of future results.
Daily Crude Oil Chart

Good Trading

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.

 

Futures Trading Levels

5-21-2021

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Economic Reports, source: 

 www.BetterTrader.co

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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 here in 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 judgement in trading.

Trading Crude Oil Futures

Posted on by Ilan

Tips for day trading NYMEX crude oil futures

By Ilan Levy-Mayer, VP Cannon Trading Co, Inc.

When it comes to day trading futures contracts, crude oil futures are assumed one of the leading positions as far as trading volume.

 

During the month of May 2018,  crude oil futures averaged around 1 Million contracts traded per day! That actually surpasses contracts like the ten-year notes, mini SP, mini Nasdaq and others who have traditionally been leaders’ in terms of volume.

 

Part of the growth in crude oil futures is attributed to day trader participation. Day traders, by definition, will enter and exit their positions during the same trading day. This adds volume to the market traded.

 

Some of the tips I am sharing below can be applied to most futures contracts as well as other financial products that are traded like stocks, forex, bonds and others. Some of the advice I am sharing is very specific to the crude oil futures trading field.

 

  1. Know the product you are trading:

 

  1. Just like a trader who trades a stock like Facebook knows what Facebook does, when its earning reports are due and other factors, so does a crude oil futures day trader needs to know a few facts about crude oil:

 

  • Contract Size: Crude Oil Futures consist of 1,000 barrels. For the trader this means that each full $1 move in crude futures = $1,000 against you or in your favor.

 

For example:  A move from 72.10 to 73.10 = $1,000 and a move from 72.10 to 72.11 = $10 (the minimum fluctuation size or the tick size). Be aware that the CME also offers the mini crude contract,  which is half the size.

 

  • Trading Hours: Crude oil futures trade on the Globex terminal between the hours of 5:00 PM CST the DAY BEFORE to 4:00 PM CST the following day. Which means 23 hours of straight trading. It is important to know that most of the volume will trade between the hours of 8:00 AM CST and 1:30 PM CST, as these hours correspond to the “pit session” of the old trading floor.

 

Another key aspect to remember is that crude oil is a deliverable commodity and the “front month” will change every 30 days or so. For example: since May 22nd 2018 we have been trading July crude oil.

 

  • Reports: There are more than a few reports that will affect crude oil future prices indirectly. These include monthly unemployment, the FOMC rate decision, and a few others.

 

However, there are two major reports that move crude oil futures and its by-products (unleaded gasoline and heating oil) sharply: The API report, which comes out at 3:30 PM CST every Tuesday, and the DOE (Dept. of Energy) inventory numbers, which come out almost every Wednesday at 9:30AM CST.

 

Take a look at this one-minute chart from Wednesday, May 16th right around the report time below to understand the volatility involved.

chart1

As you can see above, the market made a move of $700 per ONE contract in a matter of minutes, perhaps even seconds! That type of risk and opportunity is one of the factors attracting day-traders into the crude oil market.

 

  • Geo Political Events: Middle East tensions, the Iran nuclear deal, tensions between Iraq and its neighbors…these are all examples of events that affect crude oil prices. Not to mention OPEC meetings!

 

 

  1. Trading Personality:

 

In my opinion crude oil (like many other markets) will have one of the following 3 modes: trending, two-sided volatility, or Choppy/quiet/range bound trading.

 

My experience is that crude will more often fall into the first 2 categories:  strong trend or two-sided volatility.  This leads me to my next point below, different trading set-ups.

 

  1. Trading Set-Ups:

 

My preferred methods for trading crude are either breakout concept in an attempt to catch a strong move up or down once the market broke some key support or resistance levels, AND/OR counter trend methods to take advantage of when the market is oversold or overbought. Crude does seem to bring more fear and greed out of traders. So looking at RSI levels, for example, and using moving averages ON the RSI to try and get a feel for market reversals are methods worth exploring.

 

  1. Keep a journal:

 

Like with any other trading, keep a journal. Take notes on how the market reacted to certain reports, how the markets traded during certain times of the day, and action you took and emotions you had that either helped or hurt you while trading. These notes will help you going forward.

 

In summary, crude oil futures volume has increased significantly these past few years. The crude oil futures offer traders certain dynamics that other markets may not at certain times. Volatility, fear and greed are key traits for this market. Remember that trading crude oil futures specifically and futures and options in general carries a large degree of risk and is not suitable for all investors. Make sure you consult with a series 3 broker if you never traded this market before. As always, I wish you Good Trading!

 

Important: Trading commodity futures and options involves a substantial risk of loss.

The recommendations contained in this letter are of opinion only and do not guarantee any profits.

There is not an actual account trading these recommendations.

Past performances are not necessarily indicative of future results.

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.