Learn Oil Trading Courses
Oil Trading is one of the largest financial market in the world. Oil traders invest in the crude oil market popularly known as Oil Trading for speculation purposes. Oil traders are attracted to oil trading because of the following reasons:
Oil Trading Leverage - oil trading leverage means that traders can make more money in oil trading by investing little of their own capital. This is because traders can borrow money to trade with from their oil broker using crude oil trading leverage.
Liquidity - The fact that oil trading is one of the biggest financial market in globe means that there are very many traders trading the crude oil market at any time of the day or night during the crude oil market week. The fact that there are many traders investing in this market make the crude oil market a very liquid market meaning trader can open and close trade in a matter of seconds.
Low Transaction Cost - Because in oil trading there are many traders trading at any one given time means that trade costs are lower because of this big volume of trade transactions taking place in crude oil market. The only transaction cost paid by the trader is the spreads; no other cost is paid by the traders. The spread is also only when a trader opens a trade: therefore if a trader does not trade then they do not pay any cost.
This learn oil trading tutorial presents the various oil trading education courses that technical traders or traders who want to learn technical analysis can learn from. After traders have learnt the basics of oil trading it's then time to learn more about technical analysis topics that they can use to trade with.
The crude oil trading analysis tutorials can tutorial beginners on how to study the various technical analysis concepts.
Basics of Oil Trading Technical Analysis
Candlestick Oil Trading Charts
For technical traders the basic technical analysis tool that they use is the crude oil chart. There are three types of oil charts: line oil charts, bar crude oil charts & candle oil charts. The type of oil chart most commonly used by oil traders is the candlestick crude oil chart. This is because the candlestick oil chart has a visually appealing format that clearly represents the movement of oil prices, by displaying different colors for different movements; that blue color when oil prices close higher than they opened or red color that represents when oil prices close lower than they open. In addition these candles show the distance between the open and close crude oil price and this forms the body of the candlestick. This body of the candlestick is looks similar to the wax part of a real candle. The highest point of the crude oil price will be drawn with what is known as a shadow, the shadow is a thin poking line that is drawn above the candlestick and it looks similar to the wick of a real candle. There is also another shadow drawn below the candlesticks and this one represents the lowest point of the oil price.
The information drawn by the candlesticks is known as OHCL –which represents Opening oil price, High, Low and Closing oil price.
Japanese candles were created in Japan by a traditional rice trader that used to trade futures, his name was Homma Munehisa, he later moved to trading the Tokyo oil market that was in the 18th Century & he made a fortune trading the Tokyo oil market using these candles: He is said to have made over 100 consecutive winning trades.
In addition to showing the graphical representations of crude oil price traders also use candlestick patterns to gauge and determine the strength of the crude oil price movement. Oil traders also study these candlestick patterns so as to learn how to interpret and trade signals from the various candlestick patterns. Oil traders wanting to about the various candlesticks patterns can learn from our oil trading section under the technical analysis topics, the various candlestick patterns used to trade Oil Trading are:
1.Long & short Candles
2.Spinning Tops and Doji Candles
3.Hammer Oil Candle-Stick Pattern and Hanging Man Crude Oil Candle Pattern
4.Inverted Hammer Oil Candle-Stick Pattern and Shooting Star Crude Oil Candle Pattern
5.Piercing Line Oil Candlestick Pattern and Dark Cloud Cover Crude Oil Candle Pattern
6.Morning Star Candlesticks, Evening Star Candlesticks and Engulfing Crude Oil Trading Candlesticks Patterns
Support & Resistance Levels
Some traders also refer to these levels as support and resistance lines. Concepts of support & resistance levels refers to crude oil price zones where it is difficult for the crude oil price break through & move beyond these levels.
At these levels traders are likely to perceive the crude oil price of oil as being cheap or being expensive.
Support
Support prevents the crude oil price of an asset from getting pushed downward. Support levels are therefore regarded as the floor because these crude oil price levels prevent the crude oil market from moving oil prices downwards past a certain point.
Resistance
Resistance prevents the crude oil price of an asset from getting pushed upwards. Resistance levels are therefore regarded as the ceiling because these crude oil price levels prevent the crude oil market from moving oil prices upwards.
Therefore, these levels may be used by trader to determine where to open trades at the points where there is a high risk: reward ratio. For example a trader may open a buy oil trade at a support level and place a stop loss a few pips below that level. The trader buys at this point because they perceive the crude oil price to be cheap. A trader may open a sell oil trade at a resistance level and place a stop loss a few pips above the resistance level. The trader sells at this point because they perceive that at that point the crude oil price is very expensive and therefore there will be less people willing to buy oil because the crude oil price is very expensive and therefore the crude oil price is likely to start moving down soon rather than continue to move upwards.
Crude Oil Trendlines
Oil Trading Trend lines are used to determine the general direction of the market.
Sometimes support & resistances are formed diagonally in a similar way like a staircase. This forms a trend, a oil trend is a sustained movement in one direction either upward or downwards.
A oil trend line depicts these points of support & resistance for the oil price.
Oil Trading Trend line is an aspect of technical analysis that uses line studies to try and predict where crude oil price will move next.
A oil trend line is a straight diagonal line that connects two or more crude oil price points & then extends into the future to act as line of support or resistance.
Oil Trading Trendlines are based upon the idea that markets move in trends. Oil Trading Trend-lines are used to show three things.
- The general direction of the crude oil price movement up or down.
- The strength of the current crude oil price movement and
- Where future support & resistance of the current crude oil price movement are likely to be located.
If a oil trend-line forms in a certain direction then crude oil price usually move in that direction for a period of time until a time when the oil trend line breaks-out.
Upwards oil trend line - If crude oil price is moving up then a line is formed that is also moving up. This line is called an upward oil trend line.
Downwards oil trend line - If crude oil price is moving down then a line is formed that also moves down. This line is called a downward oil trend line.
Moving Averages Crude Oil Trading Technical Indicator
Moving averages are also used in oil trading to determine the general direction of the market. Moving average is a oil trend following technical indicators that is used to show the direction of the market.
The most common trading method of determine the direction of the oil trend is by using two moving averages to form the moving average crossover oil system. Moving average cross-over crude oil trading system is covered in our oil trading strategies section. The moving average crossover system is made up of two moving averages one with a lower period and the other with a higher period, for example a trader may use the 5 period moving average and the 7 period moving average, when crude oil price is moving up the two moving averages will also be moving up and when oil prices are moving down the two moving averages will also be moving down. Oil traders can also identify when a oil trend changes its direction because the two moving averages will cross over each other once there is a change in the direction of the crude oil price movement. This crossover signal is used by crude oil traders to determine when to open a new trade after the crossover signal has been generated and the two moving average start to move in the same direction. This crossover signal is also used to determine when to close a trade and take profit after there is a crossover in opposite direction.
Bollinger Bands Indicator
Bollinger bands is a very popular oil indicator, it is also a oil trend following indicator & it is used to show the general oil trend of the crude oil market. The Bollinger band is made up of three lines, these are:
·Middle band - this is a moving average of 20 crude oil price periods
·Upper Band -shows upper limit of oil price
·Lower Band - shows lower limit of oil price
The middle band will show the general direction of the oil trend whether up or down.
The upper band is where a trader will open a sell oil trade if the crude oil market trend is down or close their buy oil trade and take profit at this level if the crude oil market is trending upwards.
The lower band is where a trader will open a buy oil trade if the crude oil market trend is up or close their sell oil trade and take profit at this level if the crude oil market is trending downwards.
Oil Trading Fib Retracement Areas
Fibonacci retracement levels are popularly used to determine the levels where crude oil price retracements are likely to go up to. Oil traders use these retracement levels to determine where to open trades after a oil price retracement.
Fibo retracement levels are covered in the learn oil courses section of this site under the technical analysis topics. Trader can learn how to use the Fibonacci retracement levels, which levels are commonly used to open trades and how to draw these retracement levels using Fibonacci retracement indicator.
All these technical analysis techniques are also covered on the oil trade strategies section of this learn oil trading course site & trader can learn more about these concepts & get example of these concepts are used in trading from this oil trading strategies section that has numerous screenshots illustrations of these technical tools and how they are drawn on oil charts along with explanation of they are used to generate oil signals.
