Welcome to the fascinating world of Forex, where timing is everything if you want to make a profit. Trading any type of future on Forex is something that can be done, and it is something that you can make a very good living at with persistence, patience and an understanding of the market. Indeed, there are a lot of things you can trade on the Forex exchange and this would include crude oil futures. In order for you to be successful in this area, you will need to have a well-rounded understanding of the world and the factors that can drive this commodity up or down. If you do that, you will be very profitable indeed. Please be aware that there is much more to learn than just from this small article, but here are some tips for successful day trading of crude oil futures:
1. Study up on when the best times for demand of light sweet crude oil exist.
The prices of unleaded gas and heating oil are a heavy influence on the price of crude oil. Demand for these two elements is usually highest during the summer and winter months. For example, a very hot summer could easily mean more individuals driving. A lot of motorists on the road means more individuals filling up with unleaded gas at the pump, hence higher crude oil prices. You also should look for an extremely cold winter, especially in the Northeast. Northeastern individuals utilize heating oil quite often to heat their homes, so a cold snap in states such as Maine, New Hampshire, New York, Massachusetts, Connecticut, and parts of Pennsylvania can cause higher prices.
2. Become familiar with OPEC and how they can influence oil prices.
OPEC stands for Organization of Petroleum-Exporting Countries, and they have a huge significant short-term impact on the price of crude oil. For example, if OPEC vows to cut supply, the temporary cost of crude oil will increase. This leads to the next tip, which is….
3. Understand supply and demand.
The equilibrium of oil futures usually dictate lower prices in the long run. Whole countries are dependent on crude oil, and they are hesitant to cut supply. Cutting supply is a last resort move simply because it would mean they lose profits as well.
4. Understand the “ranges” of crude oil.
One of the most important trends to understand when it comes to crude oil would be that they are beholden to prolonged “ranges” where the price can be quite high or quite low. This means that trading of crude oil is great for long-term investors. However, if you know how to understand the influences of the market, the trading of crude oil can also be great for day traders as well.
5. For day trading, understand the pivot points.
For this, you need to have a good understanding of world events and how they can influence the crude oil markets. First of all, the weight of the dollar, the cost of jet fuel, a natural occurrence such as a tornado or hurricane, and many other things could have an effect on the day-to-day price. Remember that knowledge is power and there is nothing wrong with utilizing books from expert day traders on how to trade this commodity effectively.