February Crude Oil Trading

Sometimes it does feel like tossing a coin. Personally I like to have an opinion on both short, mid and long-term prices. Currently I rate these as uncertain, bearish and bullish respectively. That way I can manage risk better. As the short-term sentiment diverges from mid-term predictions I reduce my commitment and vice-versa.

It also influences my trading position, as I will often hold a core position based on mid-term or sometimes long-term preditions. I protect this position by actively trading the short-term trend. For example should oil retrace to $50 or lower I would almost certainly be looking to build a core long. Similarly I'm using this rally to build a core short, whilst still being net long on a jobbing basis (ie tighter stops/limits). The current contango in futures pricing makes a core short particularly appealing. Every month you collect the difference as you rollover, continually improving the net book position.