An Overview on Day Trading Crude Oil


crude oil tanks

Crude oil day trading is among the exciting products one can choose to day trade. The great liquidity it possesses allows one to realize whether they are right or wrong in the trade since moves a little bit. For this reason, it’s among the most profitable products that anyone should trade in. crude oil trading is a fast moving market and one can see relatively large p/I swings by trading a single contract using just $10. Many active day traders find Crude Oil as an excellent day trade choice.

Among the reasons that make crude oil trading a hot choice includes the fact that the volume traded averages at about 300,000 contracts daily. The liquidity is another factor; crude oil trading is considered a liquid trading market, although it usually not as liquid as others like the eMini SP. A trader should understand that slippage is more likely in markets that are of less liquidity. Slippage here means getting filled at prices that aren’t the ones desired. Traders, therefore, should be ready to experience slippage to some extent in crude oil day trading.

crude oil day tradingThe trading hours in crude oil day trading are usually from 9 AM to 2.30 PM EST. These regular sessions are at times referred to as Pit Session hours. The extended trading hours are 23.25 hrs. that has a 45-minute break. Each day for the extended trading hours starts at 4.15 pm CT.

Another of the main reason one should consider trading crude oil is the intraday volatility. Volatility refers to the measure of the distance the market will change over a period of time. This shift is usually in either direction. Markets with higher volatility are preferred by traders than those with less volatility. Volatility in this market varies not only weekly and monthly, but it depends on the day of the week as well. Volatility is mostly elevated around Wednesdays during the weekly crude oil inventory report. As a matter of fact, the report has the ability to shake the market back and forth in a dramatic manner such that most traders pause for a while to let the tremors settle before starting any other trades.

The point value for crude oil day trading is $100, and the trade moves in percentage increase of 1/100. That means that the least price move will be $0.01 and the dollar values 10 dollars. Each shift of the price of the contract by a cent will mean a change of the dollar value by $10.

crude oil tradersThe price drivers in this market are not only the inventories. Through speculation, the crude oil market can see desirable trends, in fact during the 2008 oil spike, speculators got their share of the blame for pushing the prices too high. Despite the market being driven by speculation, there are many more factors to consider. The same is what happened in the 2014 and 2015 plummet.

Looking from the demand point of view, the effect of growth level in countries like India, China and Brazil must be taken into account. Demand from these countries increases when the global economy is at a healthy state. This is the main reason oil prices and stock market seem to move in tandem. Crude oil has its price in dollars which means that variation in the dollar value has the ability to affect the oil prices inversely.

Crude oil is a great market option for a day trader. The market has many influences that drive the price and since when many businesses are being done, the liquidity shifts the market fast. Crude oil day trading is a market with lots of activity for a day trader to get revenue from.