Crude oil trading has outstanding opportunities to profit in all market conditions as it stands apart within the world's economic and political systems. In recent years, energy sector volatility has increased, ensuring that solid trends can have constant returns for short-term traders and long-term oil futures trading strategy.
Market participants often fail to take complete advantage of crude oil fluctuations. This is because they haven't understood the market's unique characteristics, or maybe they are unaware of the hidden hazard that can eat your earnings. Upon that, all the energy-focused financial instruments are not created equally with a subset of these securities, which can provide positive results.
Learn What Moves Crude Oil
Crude oil with the understanding of supply and demand as it is worldwide output and global economic prosperity. Oversupply and shrinking demand inspire traders to sell crude oil markets while increasing demand and decreasing production encourage traders to bid crude oil higher.
Tight coherence between positive elements can create powerful uptrends, like an instant surge of crude oil to $145 per barrel in July '08, while close coherence between harmful components can create powerful downtrends, such as a collapse of $37 per barrel in August '15. Price action can develop narrow trading ranges when crude oil reacts to mixed conditions, with sideways action often persisting for years at a time.
Understand the Crowd
Professional traders and hedgers influence the energy of futures day trading strategies. They dominate with industry players while opting to offset physical exposure while hedge funds make suppositions on long & short-term direction. Retail traders & investors exercise less influence in the crude oil market than in more dynamic markets like stock markets.
Retail influence increases when crude oil trends sharply, attracting capital from small players drawn into these markets by front-page headlines and table-pounding talking heads.
Pick Your Venue
The NYMEX WTI Light Sweet Crude oil futures trading strategy trades in 10 million+ contracts per month, offering excellent liquidity. Although, it has a significantly high risk due to 1000 barrel contract units and 0.01 per barrel minimum price fluctuation.
The U.S. Oil Fund provides the most popular way to play crude oil throughequitiesis by posting an average daily volume in 20 million + shares.
Oil companies & sector funds have diverse industry exposure and production, exploration, and oil service operations representing various trends and opportunities. While most companies keep track of general crude oil trends, they can split sharply for a longer time. These counter-swings generally occur when equity markets are trending, promoting lockstep behavior between diverse sectors.
Reserve currencies have an excellent way to have long-term crude oil exposure, with the economies of multiple nations attached closely to their energy resources. Bearish natural oil positions require buying these crosses, while bullish positions require selling them short.
The Bottom Line
Trading in crude oil and energy markets requires outstanding skill to build consistent profits. Market players looking to trade crude oil futures day trading strategies and its infinite derivatives need to learn what moves the commodity, the nature of the prevailing crowd, the long-term price history, and biological variations between various grades.
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Source URL: https://go.commoditiesuniversity.com/day-trading-futures-made-easy
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