Trade #87 – Trading Oil

In Trades by JCLeave a Comment

I traded $UWTI a few times in previous weeks. On 8-28-2015 I sold it for a profit. I stayed away from the stock yesterday. News from China reported weak manufacturing numbers. $UWTI lost about $0.34 yesterday after being up for 3 days straight.

I haven’t been trading long enough to realize that a 3-day rally which took prices from $0.80 on 8-27, to $1.50 on 8-31 (25% gain) was out of the ordinary. In fact, its reported to be the biggest increase since Iraq’s invasion of Kuwait.

With the price of $UWTI being around $1.17 per share this morning, I thought we were starting a new up trend. Wrong. I ended up averaging down a few times to get the price to $1.15. I had no idea that events were taking place throughout the world that would instantly effect the stocks price.

I watched as this stock went from $1.20 to $0.99 in just a few hours. A report came out this morning about oil stockpiles that sent traders running for the hills, including me. Then more news about the US-Iran Nuke deal emerged. It reminded everyone that Iran is about to flood the market with their oil as soon as the UN and US sanctions are lifted.

You can also get a feel for how $UWTI is about to trade by watching $USO and/or the CL1:COM. (Oil Commodities Futures)

CL1

UWTIStarting at 9:30am, the two charts above practically mirror each other.

I went into $UWTI today thinking it would be a nice swing trade. I learned the hard way that oil is susceptible to a wide range of global news story. You have to constantly stay up to the minute with National and International news to avoid getting burned.

This morning I entered the trade thinking long-term. When the stock dropped $0.15, I started to panic and sold. The first thing I asked myself after I sold for a loss was..

“What event, news story or catalyst was I not aware of?”

The very first news story I found mentioned high production levels found in the Middle East. The story was posted before the market opened. WTF?!?! I should of checked the news before jumping into this trade.

In the end I was right, but still lost. I¬†anticipated that $UWTI would go up. I just didn’t expect the big morning dip that shook me out. I’m still bullish on $UWTI. With all of the horrible news out there, one good story might be all it takes.

For the last 9 months, $UWTI has shown up at the top of the New York Stock Exchange Most Active List. This stock has a ton of volume each day and unlimited opportunities to long or short for those who like to day trade. I’m definitely putting this stock on my daily watch and will continue to learn more about it and its sector.

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