Oil trading forum

Oil trading forum

There are many technical indicators you can choose from. Picking the right one is important if you want to make good trades. The best crude oil day trading indicator is the Stochastic RSI indicator. At least that’s what we found out after trading the Oil market for many years.

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We’re going to incorporate this valuable resource into our exit strategy which is the Commodity Channel Index. The CCI indicator can spot in advance when an Oil cycle has ended or when a new one has started.

Crude Oil WTI Futures Price — CL Chart & Quotes — TradingView

There s no shortage of trading opportunities. Most traders close their position end-of-day (EOD) to ensure they sleep at night, considering overnight volatility.

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Unlike many other markets, if you want to have a better reading of the Oil price action, you also need to be interested in the fundamental side. The Oil supply and demand balances are a critical factor that can alter and change the Oil trend.

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Many of CME Group’s New York Mercantile Exchange (NYMEX) futures contracts track the WTI benchmark, with the “CL” ticker attracting significant daily volume. The majority of futures traders can focus exclusively on this contract and its many derivatives. Exchange-traded funds (ETFs) and exchange-traded notes (ETNs) offer equity access to crude oil, but their mathematical construction generates significant limitations due to contango and backwardation.

Professional traders and hedgers dominate the energy futures markets , with industry players taking positions to offset physical exposure while hedge funds speculate on long- and short-term direction. Retail traders and investors exert less influence here than in more emotional markets, like precious metals or high beta growth stocks.

Weather and climate affect changes in oil prices much more than they affect securities such as stocks and bonds. When there is an unusually cold winter, demand for oil (used for heating) will increase. Spring and Fall typically see the lowest petroleum values. For cyclical traders, this is often the best opportunity to enter the market.

Pricing between these grades stayed within a narrow band for years, but that came to an end in 7565 when the two markets diverged sharply due to a rapidly changing supply versus demand environment. The rise of . oil production, driven by shale and fracking technology, increased WTI output at the same time Brent drilling underwent a rapid decrease.

If tensions escalate in the Middle East, there s no telling the extent of possible supply disruptions, and traders often react swiftly on the news, adjusting their strategy following price fluctuations.

Commercial players, such as big oil producers, use the Crude Oil futures market to hedge physical exposure from possible big market swings. On the other hand, the big hedge funds speculate on the short-term Oil price direction.

The reason prices move so swiftly is that traders who have short positions in the market tend to cover their shorts quickly if price creeps up, either eroding their gains or causing losses. In order to do this, they have to place buy orders to cover. This wave of buying is done at the same time speculators are jumping on board to establish or add to long positions. The shorts will cover quickly because the risk is just too great if a major development arose that disrupted supply, shorts could theoretically lose more money than they invested, resulting in a margin call from their brokerage, one of the most dreaded calls in the world of investors.

Middle Eastern crude is known as Dubai and Oman oil. It has a higher sulfur content and falls into the category of heavy, sour oil. The Dubai Mercantile Exchange offers futures for this crude.

The usual tendency is for oil prices to spike on news of turmoil in the Middle East. Then prices calm down and start to move lower unless there s irrefutable evidence of major supply disruptions. Identifying these waves of buying and selling is very important if you want to avoid getting a haircut in the financial markets.

Despite using it every day, not many people know the differences between crude oil and gasoline. Crude is the raw material that is refined to produce gasoline, heating oil, diesel, jet fuel, and many other petrochemicals. The fundamentals are different since it is a raw product. Crude also comes in many different grades.  

Crude oil is one of the favorite markets of futures day traders. The market typically reacts very well to pivot points and support and resistance levels. You have to make sure you use stops orders in this market. Stop orders are automatically triggered trades that can help reduce the high risk of a market that can make very swift runs—up or down—at any given time.   Longtime energy trader Mark Fisher wrote an excellent book on day trading oil futures titled The Logical Trader.

This brings us to the next important step we need to establish for the best Crude oil trading strategies PDF, which is where to place our protective stop loss.

Now that we know that a prolonged overbought reading means we have the smart money buying power, we can assume that once the Oil market reaches oversold reading, the smart money will show up again to keep Oil prices up.

This volatile environment can provide some solid trading opportunities, whether your focus is on day trading futures or you are a longer-term trader. It may also provide great losses if you are on the wrong side of a price movement.

When crude oil is refined or processed, it takes about three barrels of oil to produce two barrels of unleaded gas and one barrel of heating oil.   This helps to put into perspective the production needs of crude, and why production and supply levels are watched so closely.

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