What Are the Best Guidelines for Trading Crude Oil Futures?

Crude oil future trading is always on a high as the price is always in the news.

Crude oil futures are exchange-traded and consistent contracts in which the buyer agrees to take delivery from the seller of a preset quantity at a set price at a later date.

Forex platforms are available for Trading in oil futures without actually having to trade in the futures themselves.

They, consequently, keep away from the necessity of taking the delivery at the end of it.

Some of the guidelines that can be used to trade in crude oil futures are mentioned below:

 

Top 5 Guidelines For Trading Crude Oil Futures

1. Prime Time Trade Only:

The prime time trade would be in the morning, typically around 9.00 a.m. to 10.30 a.m., when the market has just started.

Traders would be bidding their price right at that moment, so you'll have a great look at all the entries, and it'll save you from the worry and annoyance of the entire day.

It would help if you avoided the first minute as it's better to prevent a new entry. Save that time, and you're good to go.

 

2. Weekly Inventory Report:

The weekly inventory report is vital, and you cannot afford to miss it when you're trading in oil futures. It is generally because on the other days, you can trade during your prime time.

But on report day, that timing fails most of the time. Therefore, the time when you'll typically stop your online Trading on a typical day, you'll start your Trading 5 mins after on the weekly report day.

 

3. Buy And Hold

It is, for the most part well known and well-used strategy for crude oil futures trading.

Traders usually examine the supply and demand fundamentals based on the geopolitical climate and buy futures in expectation of price rise or sell a futures contract if it's likely to drop.

But it would be best to opt for the price as it needs to be adequate to give the trader a good profit before the contract expires.

In case the forecasts are wrong, the losses can be hefty.

 

4. Spread Trading

Spread Trading is a technique where you buy a contract of crude oil futures and sell another contract of crude oil futures in another month.

The intent is to profit from the variation between both contracts' purchase and selling price.

One needs to be very cautious while selecting the price range to maximize profits. The crude oil trade is growing bigger every day, and futures trading is one of the best deals available.