I’ve been inundated with email questions about trading crude oil futures. Seems like more than a few others out there are tired of twiddling thumbs while waiting for emini symbols to awaken from their slumber current comas.
Like I’ve said numerous times before, trading CL is similar but vastly different from emini markets. There is no such thing as week-long rangebound conditions. If you get one day of tight-range, choppy conditions… the next day is going to cover $2,000+ per contract distance. Count on it.
There is also no such thing as too high / too low / too far in a given day. The faders who fancy themselves as “mean reversion” traders will definitely perish sooner than later when applying that failed logic to CL. Sooner than later you’ll see a session where $5,000 to even $10,000 per contract goes straightline trend in 24-hours or less.
Charts above profile the most recent session’s (Friday Feb 24th) trade signal setups via our CM Patterns approach. Early on there was a buy signal that stopped almost immediately, a sell signal that worked for not quite +50 cents lower and then a series of buy signals afterward which all worked for at least +50 cents if not +100 cents from entry to peak.
Some key points for me in CL trading…
#1: Set a -15 cent stop to -20 cent stop (one cent = $10 value) and don’t be too quick to advance it from there. Price commonly moves +20 – +30 in favor, back to entry or slightly below and right back in favor for big money from there. Trying to get cute with trailed stops will result in par trades that would have gone +$1,000 per contract instead.
#2: Don’t try to catch everything. It takes extreme patience to wait for sweet spots that then require taking aggressive action to execute. Almost every day there will be at least one if not several +$500 per contract trades. Knowing that those situations will almost always appear and confirm, no need trying to press the issue at all. Just sit back, wait, wait, watch and wait. Maybe it happens right near 9am open of pit trading, maybe not until 1:30pm est.
#3: Don’t give up on the signals. Even if/when stopped out multiple times for scratch or loss in a day, keep taking the confirmed signals in a winning method = approach. Sometimes it is the seventh or eight trade that rockets deep in favor with no heat on its initial stop. One never knows.
In my opinion the biggest challenge for traders new to crude oil futures is patience. Trying to step right in and begin live trading without observing = mock trading this symbol to experience its subtle and likewise dramatic difference from stock index trading is a mistake. Lessons learned in real-time are always costly, and always much more costly than any type of purchased information efforts. The market itself is the most cruel and costly mentor, bar none.
Crude oil futures never ebb volatility or ranges for very long. They are always among the most active and dynamic markets available for trading. There is no big rush to enter the fray before you are ready… you won’t miss a thing, because crude oil price-action will not be dying down any time soon 
Trade To Win
Austin
