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Randy Little
No Photos 5th Nov 2011
Speculating Oil Futures: An Introduction

Probably the most critical fuel on the planet is arguably oil.Oil commodities trading can be the same as dealing with other commodities, be that corn, financial instruments or pork bellies. With futures transactions, you're granted some quite hefty leverage to help make potent trades that can make or break an individual easily. It's similar to the ES contract. Trading oil, however, is really a different activity as opposed to the S&P. Making use of technical indicators is often very difficult with crude oil because it's so vunerable to external, organic sources of volatility. S&P indicators may be less beneficial here. Oil can be seriously influenced by supply and demand, OPEC reports, inflation, and so forth. Understanding that, don't forget to keep a couple of points on your mind when starting your oil trading preparation.

Using Reports and Supply/Demand

Essential items to pay attention to are news wires and oil-related reports. OPEC reports can play a crucial role in your gains, therefore unless you're a very seasoned trader, it's recommended that you simply avoid the market on report days. There's simply no method of knowing what direction it may go, and because it's a crap shoot, capital preservation is key. Below is a listing of the report times available as of this writing.

10/11/2011, 11/09/2011 and 12/13/2011

Another suggestion is to keep your eyes on the financial news and report internet sites. Market Watch, 321energy -- all are usually terrific resources on what the key institutions are trying to do in crude oil. It truly is in your greatest interest to trade alongside them and never to be on the opposite side of the big boys.

Using Charts, Technical Analysis And Indicators
Oil can be extremely volatile and dependent on outside causes of pressure, making technical analysis very difficult. Here are some techniques and setups I have used when trading crude oil that rely on technical indicators to figure out crucial spots where I might want to trade. I'll go ahead and review a few recommendations here.

In general, having one or two daily (or lengthier) charts and a few intraday graphs for entry and exits is usually recommended. I normally stick to the current trend by watching my daily/weekly charts to ensure I do not buck the trend a lot. Then you can make use of intraday graphs and indicators to locate your entries and exits. I prefer MACD along with Market Profile indicators to provide me a good view of support plus resistance on both charts.

With Great Power Comes Great Responsibility

Buying and selling any futures contract, including crude oil, can give you tremendous leverage and may provide real results even in sideways markets. Keep management of your capital in check, invest a trading plan and have precise targets and exits planned prior to entering a trade.

crude oil

Previous: Crude Oil Trading with Commodities



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