Throughout recent years, Commodity Trading has been on the rise as more and more traders have started to realize the true potential of investing in commodities. Commodities are better than currencies and stocks and the volatility of the market allows for incredibly quick trades. If you’re new to the trading world and find all of this too confusing, don’t worry. Today, we’re going to talk about trading commodities and discuss the best commodity for day trading, Crude Oil.
So let’s get right into it.
An Introduction To Trading Commodities
There are two ways to do trading. The first is the conventional method of investing and holding for long-term returns more commonly known as Investing and forgetting. This is a less risky approach but it also gives you slow results which is why the regular traders often avoid playing this.
The other option for traders is day trading, which is investing and getting returns within a day or sometimes even minutes. Considering the volatile markets, a lot of traders are not diverting their attention to day trades and utilizing their expertise in market analysis to make quick gains.
What Is Day Trading?
Day trading is popular amongst traders who use the market’s volatility to make quick gains from the constant ups and downs in price.
For Day Traders, it is extremely important to pick a market with fluctuating prices to take full advantage of every trade. The price swings allow them to open a trade when the price drops and close it when it goes up. This can be a few seconds or a few minutes or even the entire day’s session.
Trading Crude Oil As A Commodity
The crude oil prices swing back and forth a lot during the day’s session as the slightest change in world events or geopolitical conditions or the slightest news about crude oil prices can fluctuate the market.
This level of volatility is the dream of everyday traders as effective market analysis and correct predictions can land them big profits very quickly. Traders often use crude oil day trading signals to improve their chances of landing successful trades and making gains on their investments.
Learning About Factors Affecting Crude Oil
Let’s take a look at some of the factors that may affect the price of Crude Oil.
- Demand and supply of crude oil can change the price of crude oil as a commodity in an instant. The fluctuations in supply or demand affect trading prices such that an increase in demand or reduction in supply can lead to higher prices.
- Changes in International Relations between countries are also a major factor that affects crude oil prices. This includes global relations between countries as political instability or conflicts between countries can heavily impact oil prices and contribute to volatility in the market.
- Policies and regulations implemented by oil-producing countries as well as the OPEC(The Organization of the Petroleum Exporting Countries) play a crucial role in the production and sale of crude oil and hence, affecting the prices.
- Crude oil is one of the few commodities that is generally traded via the US dollar. For this reason, the strength of the US dollar as a currency can have an impact on trading prices. A major change in the strength of the USD starts a chain reaction and affects the purchasing power of countries importing this commodity, indirectly affecting the prices of crude oil.
Technical Analysis and Indicators
Before you start trading oil or any other commodity for that matter, it is extremely important to understand the basic indicators and how they can help you predict the prices.
Here are some of the most common indicators used when trading crude oil:
Support and Resistance
Support refers to a pause in the downward trend while resistance shows the pause in price increase. Most of the time, after the resistance levels, a price drop is predicted while a price increase can be forecasted by the support levels.
The Moving Average or MA is an indicator that helps you predict the short-term spike or drop in prices. It is highly effective in day trading commodities. When the MA goes above the chart, a buy signal is indicated, and vice versa.
Moving Average Convergence Divergence more commonly known as MACD is an indicator that shows the momentum of a commodity.
Understanding The Concept of Bearish and Bullish
By definition, these are types of mentalities that a trader can have before making a move in the market.
A bullish investor makes his/her decision on the prediction that the price of a commodity is going to increase. On the other hand, a bearish investor acts according to the belief that prices are going to fall.
Crude Oil Day Trading Signals
Trading signals or forecast signals refer to suggestions regarding a specific trade and whether you should enter it or not. Moreover, they inform you on whether to buy or sell a commodity.
The platforms that give such suggestions use technical analysis and trend indicators to predict the price for a period of time. For some, the process is automated while others rely on human expertise to give their clientele the trading signals.
For volatile commodities such as crude oil, day trading signs are extremely important as they can help new traders make a ton of money without having a lot of expertise in technical analysis.
Platinum Trading Solutions is one of the most popular platforms for crude oil day trading signals and you can get their expert opinions to lock in the right trades.
Crude Oil Alerts
Similar to bank alerts that inform the account owner regarding the time and amount of each transaction, trading alerts are used as a record of the locked trade. Usually, these alerts contain the volume and the price at which the crude oil trade was opened.
WTI Crude Oil Signals
WTI Crude Oil is traded in USD and the product enjoys a lower sulfur content than Brent Crude Oil. The WTI Crude Oil trades on the New York Mercantile Exchange (NYMEX) and signals for day trading are offered by a number of platforms such as Central Charts, Platinum Trading, etc.
Brent Crude Oil Signals
Brent Crude Oil signals are also available on many platforms and day traders can easily tap into this market as well.
Forex Day Trading Signals
Some traders also work on Forex day trades and as such require Forex day trading signals.
Is Crude Oil Traded 24 Hours?
Crude oil and crude oil futures are traded almost 24 hours throughout the trading week. Traders can enjoy the leverage of convenience and trade at times they see fit.
Is Day Trading Risky?
It is recommended to evaluate all the risks associated and make an informed decision before entering a trade.