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Become very knowledgeable on trading crude oil


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Become very knowledgeable on trading crude oil

  #1 (permalink)
 
Tiffsgreta's Avatar
 Tiffsgreta 
Kanab utah/usa
 
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I wonder if anyone has any advice on how I could become very knowledgeable on trading crude oil. I am thinking books or websites that I could read from the ground up. If anyone has any advice, I would love to hear it.
I have a futures account, and I have not invested in oil - it seems so volatile.
Happy Day to you!
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  #2 (permalink)
 huracan 
Gahanna, OH
 
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The obvious way to start is to trade the micro contract and do it first in simulation and when you feel more confident move to real money and then to the bigger contract. Assuming you have a base of trading knowledge, for example trading index futures, and just want to try crude, no amount of reading will get you profitable. Here is a strategy I used to run when I traded crude years ago: A few minutes before 10:30 Eastern on Wednesday (EIA report) place a buy order and a sell order (OCO) about 6 ticks away from price. Set your targets about 12 ticks away and enjoy! Now, this stopped working a long time ago, which is why, along with the fact that I had my face ripped off by crude several times, that I don't trade it anymore. But, things change and it might be working again, I haven't checked. I think it would be a fun thing to try again in sim mode.

Good luck in your trading!

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 Schnook 
Munich, Germany
 
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One good place to start would be the CME website, which offers a fairly comprehensive library of educational resources

https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

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Tiffsgreta's Avatar
 Tiffsgreta 
Kanab utah/usa
 
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Schnook View Post
One good place to start would be the CME website, which offers a fairly comprehensive library of educational resources

https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

Thank you Schnook - I have been looking at the CME website - just wish it covered with a lot more realistic trading examples.

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Tiffsgreta's Avatar
 Tiffsgreta 
Kanab utah/usa
 
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huracan View Post
The obvious way to start is to trade the micro contract and do it first in simulation and when you feel more confident move to real money and then to the bigger contract. Assuming you have a base of trading knowledge, for example trading index futures, and just want to try crude, no amount of reading will get you profitable. Here is a strategy I used to run when I traded crude years ago: A few minutes before 10:30 Eastern on Wednesday (EIA report) place a buy order and a sell order (OCO) about 6 ticks away from price. Set your targets about 12 ticks away and enjoy! Now, this stopped working a long time ago, which is why, along with the fact that I had my face ripped off by crude several times, that I don't trade it anymore. But, things change and it might be working again, I haven't checked. I think it would be a fun thing to try again in sim mode.

Good luck in your trading!

Thank you so much huracan - you have provided me such a great idea. Ill probably try it sans realtime, and just check out what would happen on paper to give me a feel for it

BTW I have so money in gas options and a mini contract - I hear its the crack cocaine of futures. We'll see what I'll rip in that! Thanks again.

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 Schnook 
Munich, Germany
 
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I referred you to the CME website because it's important to understand the basic mechanics of futures markets before diving in. If you truly have all that covered then I'd recommend some of the resources available right here on this website.

For example, this thread, The [AUTOLINK]Scalper[/AUTOLINK]'s Journey, describes in detail at least one method of scalping crude oil, and also covers in greater detail the bracket trade mentioned above.

But it's also important to find a method or style that suits your personality. Time-frame, for example, is one of those things that's very helpful to define ahead of time. The shortest time frames (market-making and scalping) have the highest relative transaction costs and extremely tough competition. Due to the high execution costs (commissions plus slippage) relative to profit targets of just a few ticks, scalpers need a very high win-rate in order to be successful. Moreover, an individual scalper must compete directly with the most sophisticated institutional traders in the game (HFTs, quant shops, hedge funds etc), making it an extremely challenging environment to succeed in. But if you can achieve success in this arena then the law of large numbers will provide you with some of the smoothest daily return profiles achievable in futures trading.

On the other end of the spectrum - swing trading - the competition is much thinner, transaction costs lower, and the setups perhaps a bit easier to identify, but the intraday P&L swings are also much greater and difficult for many traders to endure. Swing traders must be prepared for the possibility to have losing weeks and months at a time, even when trading a proven successful long term strategy. Again, this is not for everyone.

And then with your time frame defined you need to choose some sort of a style or analytical framework that not only suits your brain but also works. Price action trading, order flow, volume profile, or some unique combination are but some of the methods that traders apply to the crude oil market. You may wish to explore these concepts, watch some of the webinars on this site or read books and articles dedicated to these methods, or you may instead wish to simply watch and study the market independently in order to detect patterns and setups on your own.

It's a long process, one that is likely to take several years to gain the proficiency, but there's no shortage of information available for the enterprising student of the markets.

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Ozquant
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Plenty to be learnt in here , big read though and you need to sort through the sh!t


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 matthew28 
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Tiffsgreta View Post
Thank you so much huracan - you have provided me such a great idea. Ill probably try it sans realtime, and just check out what would happen on paper to give me a feel for it

https://us.econoday.com/byweek.asp?cust=us
10:30am Eastern Wednesday, (11am Thursday when Monday is a holiday), is the big major news event for Crude every week. Look at a depth of market and you will see market depth drop to a fraction of normal size as people pull their orders before the report. It might look good on sim with instant fills depending on your platform but in reality you would likely get big slippage on your entry stop above or below the market. So when looking at your paper results, or a graph afterwards, don't assume you would have got filled at +6 or -6 ticks. Presumably huracan says it stopped working because of the whipsaws in price after entry.

You do not win as a trader, you just get to play again the next day. If that game doesnít appeal to you then you should not trade. Gary Norden
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dyst's Avatar
 dyst 
Singapore
 
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What was the slippage like back them? I tried something similar before in 2019 and ended up with big slippage... that ate into the profit


huracan View Post
The obvious way to start is to trade the micro contract and do it first in simulation and when you feel more confident move to real money and then to the bigger contract. Assuming you have a base of trading knowledge, for example trading index futures, and just want to try crude, no amount of reading will get you profitable. Here is a strategy I used to run when I traded crude years ago: A few minutes before 10:30 Eastern on Wednesday (EIA report) place a buy order and a sell order (OCO) about 6 ticks away from price. Set your targets about 12 ticks away and enjoy! Now, this stopped working a long time ago, which is why, along with the fact that I had my face ripped off by crude several times, that I don't trade it anymore. But, things change and it might be working again, I haven't checked. I think it would be a fun thing to try again in sim mode.

Good luck in your trading!


Numbers work... Magic lies in the numbers
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 dyst 
Singapore
 
Experience: Intermediate
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Just be careful if you are trading QM. Slippage can be high there and price can be 0.20 - 0.30 higher or lower than the full sized CL contract at the same time. Happened to me last year... on QM it hit my stop since API resulted in big spike but on CL it did not even hit that price (max it went was 0.30 lower than the QM price).

Also, during the DOHA week years ago QM opened below support while CL opened above support... big difference. Then I learnt the hard way that we should be analysing CL when trading crude since it is the more liquid of the 2. CL, not QM chart will show you the correct TA to take for trades (though you can enter the trades via QM).

Good luck and happy crude trading




Tiffsgreta View Post
Thank you Schnook - I have been looking at the CME website - just wish it covered with a lot more realistic trading examples.


Numbers work... Magic lies in the numbers
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