Crude Oil Range & Liquidity

What to trade, what to trade.

Why do I trade crude oil instead of the Russell, Dow, or S & P futures?

Two words; range and liquidity.

If you look at the bottom of the daily chart posted you see a little number, 4.21. This number is the 5 period (in this case days) average true range of the crude oil contract.

In dollars it means the daily average true range over the past 5 days is $4210.00. You can use 5 days or 10 days or whatever number you want, but I would encourage all traders to take a look at this number on the contract they trade.

If you are only going to capture a limited percentage of a contracts daily range, does it not make sense to try and capture that percentage out of a $4000 range rather than a $2000 range?

Liquidity is the other prerequisite to trade and crude oil has more volume than most equity index futures other than the big daddy, the S & P futures contract.

While the S & P has more volume check out the range and see how it compares.

Oh and the eternal question for crude oil again, how high can it go?

To infinity and beyond.

Trade the plan.

(click on chart for better view)