Crude oil trading is known for its super volatility and great price fluctuations. It’s not an uncommon phenomenon to trade down in the morning and close at a high at the end of the trading day. Traders apply many popular strategies that take benefit of this unpredictable nature of crude oil trade. By analyzing crude oil markets, traders can choose the trading strategy they think will lead to a profit.

Buy and Hold Strategy

This is by far the most famous and most popular crude oil trading strategy. Traders have to analyze basics like demand and supply and geopolitical climate and purchase a crude oil futures contract expecting a price rise or sell a crude oil futures contract if the price is expected to drop. The price should make a significant move to offer the trader a profit before the expiration of the futures contract. If the prediction of the trader about the market price or direction proves to be wrong, the trade results in a loss.

Technical Analysis Strategy

Traders take their investment decisions by using certain technical indicators to price charts over various time periods. Bar charts, candlesticks and volume indicators help them predict the next price move of the oil. These same crude oil trading signals can be used on a 2-minute chart, 5-minute chart, 1-hour chart and 1-day chart for deciding whether to purchase or sell a crude oil future.

Swing Trading Strategy

This strategy involves purchasing a security and holding it for a short period that can range between a few minutes and four days. Swing traders depend on short-term alterations in demand and supply and technical analysis to decide the trend of the market. They purchase a futures contract if the market trend is up and sell it if the trend is down. They benefit from the volatility of crude oil market and will close out a trade even if it makes a small profit. There is a great risk in swing trading and money can be quickly lost if the market is moved unexpectedly against the traders.

Spread Strategy

This involves purchasing one crude oil futures contract in a month and selling another in a farther out month. This is done for getting a profit from the anticipated change in selling and buying prices of both the contracts.

By applying one or more of these crude oil trading strategies, you can be benefited and earn a profit. Apply them and enjoy profiting.