Regarding intraday trading:

I guess it's not recommended to trade on the expiration day of a given product due to increased volatility and abnormal market conditions.

I heared one trader say that he generally doesn't trade in the hole week of the expiration. But this would f.e. mean, that he can trade the CL only 3 weeks a month.

What is your take on this? When should one be careful?

Thanks

jemayer 

Regarding intraday trading: I guess it's not recommended to trade on the expiration day of a given product due to increased volatility and abnormal market conditions. I heared one trader say that he generally doesn't trade in the hole week of the expiration. But this would f.e. mean, that he can trade the CL only 3 weeks a month. What is your take on this? When should one be careful? Thanks

you have to look at the volume. The Jist of it is, don't trade a thin market.
You can switch to options that week if you want. I think options are great if you don't trade a six, seven figure account

jemayer 

But this would f.e. mean, that he can trade the CL only 3 weeks a month.

Trade the second month the other week

jemayer 

I guess it's not recommended to trade on the expiration day of a given product due to increased volatility and abnormal market conditions. I heared one trader say that he generally doesn't trade in the hole week of the expiration. But this would f.e. mean, that he can trade the CL only 3 weeks a month.

MNSTrading 

you have to look at the volume. The Jist of it is, don't trade a thin market.

SMCJB 

Trade the second month the other week

You want to trade the "front month," which is not necessarily the current contract as it nears expiration. Traders will roll out to the next month's contract based either on the volume (as we enter rollover week the next contract will become more heavily traded) or just using a calendar rule (i.e., just don't trade the contract in its last week.) Whichever rule you use, you can trade all month, but at some point you go to the next contract.

As it winds down, the drop off in volume will be obvious, and you won't want to trade it. Time to move on then and go to the more active contract month.

Bob.

jemayer 

Regarding intraday trading: I guess it's not recommended to trade on the expiration day of a given product due to increased volatility and abnormal market conditions. I heared one trader say that he generally doesn't trade in the hole week of the expiration. But this would f.e. mean, that he can trade the CL only 3 weeks a month. What is your take on this? When should one be careful? Thanks

What Bob said.

When a contract reaches its 'Expiration day' that means that a newer contract has already become the front month.

'Front month' refers to a contract where the most traded volume is, for a product.


Example: product CL (Crude Oil)

Until 18th May 2021, the most heavily traded month for CL was "M" (June 2021). On that day, the "N" contract (July 2021) overtook the "M" contract which has now become the most heavily traded (most liquid).

When I say 'overtook' I am talking about traded volume.

I think "M" is still trading, but it's expiring soon (today, or tomorrow maybe, not sure) and volume has dried out.


So what your trader friend said makes sense, he avoids trading contracts near expiration. But it does not matter, because a newer contract for the same market is now being traded with more volume.

Regarding Crude Oil I always tend to be very careful around the Rollover day , the day prior and the first day of the new contract. They are usually not easy to trade (atleast for me).

I usually only use a few strategies on those days, if I see a chance. They can be pretty one sided (Like Monday the 17th. Only Long after the Pit Open) or have some quick dumps and then reverse.

I screenshotted the last 15 Rollover days (including the day prior and after) and only trade patterns i recognize and make sense to me.