If you like commodity trading like me, you must be considering crude oil trading. It is one of the commodities used the most in the world today. It fuels our lives and as you will project, you can also make money trading in it. The one question am asking myself is; is it possible to earn 5 to 10 points on crude oil trading?
This is what I want to research and find out. In the process, I will share with you the information am gathering. This is to help you too to get into crude oil trading.
I do like oil and gas as an industry. It is possible that this developed back in my school days when I got introduced to the rock topic.
It was my best topic and I truly enjoyed my lessons. However, there could have been another motivation.
You see, we had a very beautiful teacher. I had taken a liking for her and to impress her, I studied hard to get good grades.
Did she notice me? Well, let us just say I was her favorite student. This is a story for another day.
Is it Possible to earn 5 to 10 Points in Crude Oil Trading
You can be able to earn 5 to 10 points when trading crude based on the strategies and the positions to take during trading period.
It is possible for you to take a trade or two per day and earn 5 to 10 points.
Your success in crude oil trading is heavily dependent on the strategies you take and the markets movements during trading.
It is therefore advisable that you be keen on the market dynamics to ensure you secure a profit from your day trading activities or positions.
How to earn 15 points in Crude Oil Trading Daily.
If you are wondering if it is possible to earn 5 to 10 points from your crude oil trading activities, someone else is wondering how he or she can earn 15 points in crude oil trading daily.
As you will find out shortly, there are strategies and tips you can use to earn 5, 10 or 15 points in your crude oil trading.
Crude Oil Trading Hours
As you engage in crude oil day trading, it is important for you to understand the trading hours.
The crude oil trading hours for WTI and Brent crudes are as follows;
WTI trades on CME Globex:
Sunday – Friday, 6:00 p.m. – 5:00 p.m. (with an hour break from 5:00 p.m. to 6:00 p.m. each day)
Brent trades on ICE:
Sunday – Friday – 7:00 p.m. – 5:00 p.m.
5 Key Steps to Earn Points and Make Profits in Crude Oil Trading
In your journey of crude oil trading, there are some basic things you should do.
In this section, I want to share with you steps you can use to earn points and generate a profit from crude oil trading.
The steps include;
- Understanding supply and demand dynamics.
- Know your crowd.
- Picking type of crude to trade in.
- Doing analysis.
- Choose your venue.
The above are steps you can use in day trading of crude oil. They clearly show that it is possible to earn 5, 10 or 15 points in crude oil trading.
Understanding supply and demand dynamics.
It is important for you to know that crude oil market is determined by the forces of supply and demand.
How the world’s economy is performing has a direct impact on the crude oil trading.
If you find that there is an oversupply and less demand, this encourages oil traders to sell.
A rising demand and a reduced production encourages traders to bid crude oil higher.
To earn 5, 10, or 15 point in your crude oil trading, you should keep an eye on these dynamics. They will determine if you will turn a profit from your daily trading activities or positions.
For example, you could have seen an increase in oil prices to$145.31 per barrel in 2008, and you might have seen the crude oil prices hitting negative in 2020.
Know your crowd.
This point speaks to the idea that every market has segment of players or stakeholders.
In crude oil trading, you will find professional traders and hedgers. These are the people who dominate the market as their investment and exposure is huge.
The other segment consists of retail traders. This includes you if you are doing crude oil trading all by yourself.
All these players affect or influence the market in one way or the other. The response from each to market dynamics can affect the point or profit you are earning from trading.
That is why it is important to understand and know your crowd when it comes to crude oil trading.
Picking type of crude to trade in.
As you get into this market nd wonder whether it is possible to earn 5 or 10 points in crude oil trading, you should also know the types of crude there are in the market.
Crude oil trades through two primary markets;
- West Texas Intermediate (WTI) Crude
- Brent Crude
Many of CME Group’s New York Mercantile Exchange (NYMEX) futures contracts track the WTI benchmark, with the “CL” ticker attracting significant daily volume.
The majority of futures traders can focus exclusively on this contract and its many derivatives.
Exchange-traded funds (ETFs) and exchange-traded notes (ETNs) offer equity access to crude oil, but their mathematical construction generates significant limitations due to contango and backwardation.
Long Term Analysis
It is possible for you to earn 5 to 10 points in crude oil trading. I have actually seen and read reports of people earning even 15, 30 or 40 points.
To have success in crude oil trading, you should be able to analysis various aspects of the crude oil markets.
A long term analysis of the crude oil prices is a good starting point. You should also seek to do some basic technical analysis.
Choose your venue.
When you are asked to choose your venue for crude oil trading, it means you need to pick the exchange you will use or the platform you will use.
For example, NYMEX WTI Light Sweet Crude Oil Futures contract provides great liquidity. However, it has a minimum price fluctuation.
Another venue you can choose is the U.S Oil Fund which provides a way for you to play the crude oil game through equity markets.
This security tracks WTI futures but is vulnerable to contango, due to discrepancies between front month and longer-dated contracts that reduce the size of price extensions.
Some of the largest U.S. oil company funds are:
- SPDR Energy Select Sector Fund (XLE)
- SPDR S&P Oil & Gas Exploration and Production ETF (XOP)
- VanEck Vectors Oil Services ETF (OIH)
- iShares U.S. Energy ETF (IYE)
- Vanguard Energy ETF (VDE)
In conclusion, crude oil trading can be a profitable investment and a way for earning some income for you. This offers you a unique opportunity due to the role crude oil plays in global markets.
It is possible to earn 5, 10 or 15 points in crude oil trading. However, you need to develop, acquire or improve your skills if you are going to play in this game. You need to know the types of crude oil, what is moving the market, different players as well as the long-term price history of crude oil.
To achieve this, you will need to have a clear trading strategy, and explore the tips or ideas that I have shared with you above.
However, always remember that crude oil trading is volatile. You should have a risk management plan to ensure you do not lose your investment.
On the stock market front, it is the volatility in prices, the liquidity of crude as a commodity, and the various other factors that contribute to the fluctuations, which then impacts the price.
It is essential to understand these factors to know what to expect from trading a commodity like crude oil and make money from it.