Trading crude oil prices or oil etfs can be tricky. Or NOT! If you can find the dominant cycle and add a smart oscillator you can achieve good returns. Via our RTT Cycle Spectrum scanner we found that the daily 56 cycle period has been working well with the oil etf USO, and add a few simple rules one can profit.
Confessions: In all honesty we do not trade the USO due to its poor correlation to the underlying commodity crude oil. But the following is a great example of how to take small positions (maybe with call options) within a sideways market. Also you would not be able to find the winning dominant cycle until July 2009 as the data took time to form after the financial crisis March 2009 low. Never the less, results would be acceptable after July 2009. We must also state that we do not have a scientific back test of the trading plan you see below, but I will say on finding the true dominant cycle this will always help you get better than average results. The below is not a system or trading plan that readtheticker.com sell, we allow members to build their own rules and methodologies with the tools we provide, results may and will differ, please see our terms and conditions.
You must forgive me for using such exciting headlines, then how else can I portray such a great chart.
When considering an trade entry we generally review price action using the knowledge sourced form Tom Williams book 'Master the Markets' (see our education page for a link).
The blue horizontal bars occur when the RTTMarketPulse blue line crosses over the red line (an upswing).
