Day Trading Crude Oil Futures In the Big Leagues With Little League Money

Since the proliferation of the internet, day trading has become all the rage. An obstacle to entry of this business is that day trading, including trading futures, can require a substantial amount to cover margins and for a well-funded account. An account capable of properly managing risk can mean big bucks for many, especially beginning traders. Here’s a tip on how to trade like a big leaguer but fund an account with a little league amount of money. Crude Oil is a popular futures market to trade for many day traders wanting to trade futures. Its volatility provides nice moves to profit from; however, it’s $10 per tick. There is a way to trade it for half the amount per tick and even as low as $1 per tick.

E-mini Crude Oil Half the Tick Value

What is unbeknownst to many is that there is an E-mini of Crude Oil known as QM, and it is possible to trade the QM while following the CL market on your chart. QM is priced per barrel just like Crude Oil or CL, but instead of price being based on times 100 barrels like CL, QM is based on times 50 barrels. It also ticks a bit differently. CL ticks in increments of 0.01 and QM ticks in increments of 0.025. From the chart below you can see what the dollar amount would be of a 0.10 move in Crude Oil for both Crude Oil and QM.

To view larger image click HERE.

Trade Decisions Based On CL

The important piece to know is that because CL is the more liquid of the markets having high volume, it is better to chart and watch the CL market while you trade the QM. For example, a way to do this would be to use the NinjaTrader platform, have a chart opened with CL, but use the Super Static Dom to place your trades for QM. The DOM will allow you to see potential liquidity in QM. Charting the QM with larger tick sizes could require major adjustments on chart settings and indicators, and could also mean later entry signals. For those reasons, in addition to more liquidity in CL, you want to make your trade decisions based from the CL chart.

The difference in tick sizes also means there will be times the markets will not be moving tick for tick. To account for this while trading the QM at 0.025, the larger of the two tick values, just round up or down accordingly to your current trade strategy. For example, you could take profit when both markets hit 51.10 rather than when price hits 51.11 on the CL chart. That may have been your desired choice, but if you wait for the CL market to reach 51.11, your take profit won’t actually be hit until 51.125 on the QM. This could give the market time to turn around before it hits your take profit 51.125 in QM. For stops and take profits, round down or up as applicable, or if price hits on CL just hit go flat on QM immediately if not filled.

Trade CL With Nadex Spreads At $1 A Tick

You can trade CL at $5 a tick on QM and with Nadex Spreads you can trade CL even lower at $1 a tick. In addition, at Nadex there is no margin requirement and your total defined risk is up front. In the futures market there is unlimited risk.

You can trade Nadex Spreads with confidence knowing you won’t be stopped out. Depending on where the floor and the ceiling are in relation to your position and your risk, you can choose whether you exit your trade or hold it until expiration. The market may turn against you, then come back in your favor, but you would not be stopped out.

To learn more on how to trade the QM and Nadex Spreads you can visit www.apexinvesting.com.