Crude Oil Trading Strategy || How to Trade Crude Oil || Best Entry Point

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Crude Oil Trading Strategy || How to Trade Crude Oil || Best Entry Point

Crude Oil is one of MY favorite futures market for day trading. Before I dive in and share with you how the volatility in crude oil fits my risk tolerance for day trading and provide a couple of chart examples, we should review some of the specifications of Crude Oil Futures.

Crude Oil Futures have monthly expiration. So each month we trade a different contract month, so one needs to know when is the first notice day and last trading day for crude oil futures in order to always make sure we are trading the proper month with the most liquidity and avoid any chance of getting into delivery situation.

Next is the contract size. Crude Oil futures are based on 1,000 barrels. To be honest from a day trading perspective all I care is that each tick or 1 cent fluctuation is $10 against me or in my favor per contract. That means that a move from 92.94 to 92.74 = $200.

Another factor is trading hours. At the time I am sharing my thoughts with you, April 8th 2013, crude oil futures trade on the CME Globex platform and trade from 5 PM CDT until the next day at 4 PM CDT. That is 23 of straight trading hours. I definitely don’t recommend day trading this market 23 hours…but it is good to know the trading hours.

Volume in crude oil futures is pretty good to trade in my opinion. Averaging about 300,000 contracts per day.

One last pointer to touch on is the Energy Information Administration (EIA) report that normally comes out Wednesday at 9:30 CDT. I tell my clients that this report is way too volatile and I like to be out 5 minutes before and not resume trading 5 minutes until after the report comes out.

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