Best Intraday Crude Oil Trading Strategy

Best Intraday Crude Oil Trading Strategy

Best Intraday Crude Oil Trading Strategy

Here are many strategies in the market.

Especially for crude oil, these are based on many criteria, indicators, price, support and resistance, swing trading, candlestick pattern etc.  BUT ALSO

Some strategies are very good and some do not work as expected and required.  BUT ALSO 

Whatever strategy works well, we have studied and developed for the general merchants.   Best Intraday Crude Oil Trading Strategy

This strategy is very simple and easy to understand.

It has not got any complication which can be considered difficult.

People without technical knowledge can also use it.  BUT ALSO

Best Intraday Crude Oil Trading Strategy

Key features:

This is for those who are not making good profits.        BUT ALSO

Intraday is suitable for full-time / part-time merchants.Best Intraday Crude Oil Trading Strategy

This is Suitable for HNI and small traders. BUT ALSO

Buying and selling basics, (general order, bracket order, cover order, stop loss).

Candle Stick Pattern Basics, Volume Basics.

 

Best Intraday Crude Oil Trading Strategy
Best Intraday Crude Oil Trading Strategy

Gap Up and Gap Down Basics.

The basics of price action.   BUT ALSO

Major support and resistance.

Selling top, buy down (how to buy below, how to sell on top with a small stop loss)

How to trade in the trending market. Best Intraday Crude Oil Trading Strategy.

How to trade in a narrow/flat market.      Best Intraday Crude Oil Trading Strategy.

How to trade in inventory.    Best Intraday Crude Oil Trading Strategy.

Low risk and high reward ratio.         Best Intraday Crude Oil Trading Strategy.

No use of indicators and software.

Business value will be based on action and quantity. Intraday Trading Strategy Breakout Trading Strategy.

An Intraday Approach to Trading Crude Oil Futures Contracts

Talking about developing a steady credible approach to crude oil intraday trading. BUT ALSO

Then we will expand completely from an ‘approach’ to the automated trading strategy.

which you can implement quickly and easily.   Best Intraday Crude Oil Trading Strategy.

Best Intraday Crude Oil Trading Strategy

First things first before jumping into the real strategy.   BUT ALSO

An agreement with crude oil is equivalent to 1,000 barrels of crude oil.

The minimum price is trick .01, or 1 penny.       Best Intraday Crude Oil Trading Strategy.

In the price movement, 1 paisa is equal to $ 10.  BUT ALSO

 

Best Intraday Crude Oil Trading Strategy
Best Intraday Crude Oil Trading Strategy

 

To simplify things, if you buy a single contract of crude oil for $ 50.00, and then quickly sell for $ 50.01, then your profit will be $ 10.           Best Intraday Crude Oil Trading Strategy.

The contract for crude oil is highly liquid typically.

Thus one million contracts will trade on any day.

For the trading of crude oil futures contracts, the best time of day is during the ‘day session’.

The day session will be defined as 9 AM (EST) – 11:30 AM (EST).

If you do business within this time frame then you will participate in most of the daily trading volume.

The only advantage of trading within the daytime session is that the bid/asset spread (usually) remains at 1 paisa in bulk.      Best Intraday Crude Oil Trading Strategy.

It is also important to terminate your crude oil futures contract before the end of the day’s session.

If you do not, then you will expect maintenance margins of $ 2,500- $ 3,000 per crude oil futures contract.       Best Intraday Crude Oil Trading Strategy.

For the purposes of this blog post, we are only going to focus on the crude oil futures contract.

We do not want any overexposure or additional margin requirement.

We would like to get the most trading bang for our trading buck.

Best Intraday Crude Oil Trading Strategy

Whenever you are in a business then you should ask yourself a simple question – Do I currently have a statistical advantage?  Best Intraday Crude Oil Trading Strategy.

If you do not, then you are an old lady playing a penny slot machine at an Indian casino.

The sucker is putting his casino chips on red or black Ore strayed from the point that Bruno.  ALSO BUT. 

‘The Magnificent’ Beefcake will beat Rocky in the 8th round via TKO. You are gambling.

When you are gambling, you are betting on one where the home has a statistical advantage.

Sufficient wagers and home will grind you to nothing.  Best Intraday Crude Oil Trading Strategy.

You do not want to gamble you want to be the owner of a slot machine, or roulette table or sports book.

To achieve this, you need a statistical edge.  Best Intraday Crude Oil Trading Strategy.

Let others play against your edge, and watch them defeat them. ALSO BUT.

Best Intraday Crude Oil Trading Strategy

Best Intraday Crude Oil Trading Strategy

In a former blog post, we talked about simple and robust business.

The strategy that we implemented on the Amini SP 500 futures contract.

The concept is exceptionally simple.  Best Intraday Crude Oil Trading Strategy.

We only want to do business towards the main trend of the day.

We call this strategy a mid-point trading strategy.   Best Intraday Crude Oil Trading Strategy.

You can read about that trading strategy here.   Best Intraday Crude Oil Trading Strategy.

In an additional blog post, we expanded the concept of Mid-Point Trading Strategy with VIX Volatility Filters.  Best Intraday Crude Oil Trading Strategy.

The end result was a fully functional business strategy.        BUT ALSO

Today, take a mid-point trading strategy and apply strategies for the crude oil futures contract.

Best Intraday Crude Oil Trading Strategy

Exact Rules

Using only the day session of the crude oil futures contract.

we are going to focus only on the Buy side, or the long side.

Entry rules as follows:

Wait 2 hours after opening the market.   Best Intraday Crude Oil Trading Strategy.

Calculate the mid-point of the daily limit.

When the bottom half of the 5-minute bar crosses the mid-point, we want to buy crude oil in the market.

Exit rules as follows:

If the height of the 5-minute bar is higher below the mid-point, then exit the trade in the market.

Exit business at the end of the day session. BUT ALSO

Best Intraday Crude Oil Trading Strategy
Best Intraday Crude Oil Trading Strategy

How can we improve individual trading performance?

How can we do it without adaptation?   Best Intraday Crude Oil Trading Strategy.

How can we preserve the underlying argument without overfitting the possibility of random results?

For this particular strategy, I want to present an instability filter, especially OVX.

What is the OVX?

Many readers are probably scratched their head and are thinking, “What is hell in OVX?”

OVX (Oil Vicks) was launched in 2008 by the Chicago Board of Trade. BUT ALSO

It is a measure of 30 days of volatility in crude oil prices by implementing the ViX calculation for the USO or United States Oil Fund.

The calculation involves a broad spectrum of options prices.

Best Intraday Crude Oil Trading Strategy

The calculation encompasses a broad spectrum of options prices.

I know, it sure sounds confusing But does not let it!

In a nutshell, when the OVX is down, And we can probably expect a rally in oil prices.

When the OVX is up, then we could have the oil prices to drop.  BUT ALSO

Like VIX, OVX is not an ideal predictor.    Best Intraday Crude Oil Trading Strategy.

But in the land of the blind, one-eyed man is the king.

Is there any scientific evidence that supports the theory that OVX can predict crude oil prices? Yes.

In fact, many academic findings have emerged to support the theory.

I hope the audience will not need to understand the referenced calculations in the article quickly.

I peeled the theory only, and then experimented with the theory on their own platform, using their own data.

Best Intraday Crude Oil Trading Strategy
Best Intraday Crude Oil Trading Strategy

Crude Oil Trading Strategy: Using the OVX as a filter

Okay, so now take our original mid-point trading strategy and add the OVX as a filter.

The exact rules are as follows:

Wait 2 hours after opening the market.   Best Intraday Crude Oil Trading Strategy.

If OVX is less than 2%.   Best Intraday Crude Oil Trading Strategy. 

Best Intraday Crude Oil Trading Strategy

Calculate the mid-point of the daily range of crude oil.            BUT ALSO

When the half-bar under the 5-minute bar crosses the mid-point, then we want to buy crude oil in the market.

Exit rules as follows:

If the high of a 5-minute bar crosses below the Mid-Point, then exit the trade at the market.

Exit the trade at the close of the day session.    BUT ALSO B UT ALSO Best Intraday Crude Oil Trading Strategy.

When to turn this strategy OFF

The whole strategy is broken.    BUT ALSO Best Intraday Crude Oil Trading Strategy.

The market is skilled, other participants will eventually gain this edge and will try to take advantage of it.

Once this happens, then edges disappear.

So you should have a mechanism that will close the system.   ALSO BUT

If you focus on the above equity curve, then there is a blue line.  BUT ALSO

This line is a 100-time moving average of the equity curve.  Best Intraday Crude Oil Trading Strategy.

Once the real-time performance holes the equity curve – the gig is up.

The border has gone. Probably never return. So it is already important. BUT ALSO

 

Best Intraday Crude Oil Trading Strategy
Best Intraday Crude Oil Trading Strategy
Best Intraday Crude Oil Trading Strategy

Wrapping things up

The main takeaway is that if a pre-ears, high school dropout with a little math skill can detect this stuff then you can.  Best Intraday Crude Oil Trading Strategy.

You do not need fancy indicators or a guardian who runs the $ 5 trillion hedge fund.  BUT ALSO

However, you just need to sit and ask the questions of the data.  Best Intraday Crude Oil Trading Strategy.

The answers are in plain place. But you have to ask questions.  Best Intraday Crude Oil Trading Strategy.

Further, once you start asking questions then your imagination will catch the root.

Your questions will turn into fever and swamps of research and discovery.  BUT ALSO

You will go mad quickly, who knows in hell where your research will lead the leadership.

But the key is research and testing.  BUT ALSO

Another useful advantage of testing and research is that you will quickly find out what does not work. BUT ALSO

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