I would say that you should have an understanding of the fundamentals to trade oil. Intermarket and macroeconomic analysis comes very in handy. If not, at least stay out of the market when news is released...
As for the price action itself, it trades very cleanly. It definitely makes sense to let your winners run...
In fact, the most basic principles works perfectly well. It is a volatile instrument, use that to your advantage...
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Although I posted a setup with a small stop and small target, you can also trade oil effectively (possibly more effectively) with 20, 30, 40, 50 tick stops, because crude has such extreme ranges. I actually don't recommend scalping, but some people are very good at it. And a lot of traders seem to prefer it for the small perceived loss and short hold time. But, learn to let one run and crude is a market where you can make up multiple small losses in one good trade, if you can just hang on and not let it fake you out. The supertrend may do that for you on the right chart.
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I've used every combination of indies on a 12 range chart. Most of them work. But for me, CL moves so fast most of the time that simpler is better.
So I now use only a 50SMA that changes color based on slope.....trend lines and certain bar patterns that set up quite frequently on CL at or near trend lines.
I agree with the 20-30 stop and targets. Get it right and you can easily get 100 tick runners. But for me, after talking to a major ES trader, I've gone with smaller targets based on my personality type. I target 10-15 ticks a trade, look for net 30-50 a day and call it quits. This usually works out to being done within the first hour or so. Sometimes longer if I hesitate and not take trades. My fault there.
But essentially, you can trade CL with very simple indicators. The super trend works well if you plan to hold for a long time. Just don't use to tight of a multiplier, you'll get lots of chop. I had mine at 3.75 or 4. Those settings did a decent job of capturing the trends. I never entered on the super trend change though. I always waited for at least a 38% pull back and hopefully more.
Hope that helps.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
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If you're going to trade CL, you'd better have your $**t wired tight.
You'd better be able to stomach some wide swings if your entries aren't superior as the big players love to push retailers out of their positions.
In essence, if you don't have sufficient capital to trade with some wide stops, you'd better have a serious entry edge.
Furthermore, CL not only has range, but velocity, so if you're going to discretionary trade, you better have mastered the nuiances of the market and have an intimate knowledge of how it moves.
CL moves so quickly, that those who don't have a seriously solid PLAN and stick to it, can get spun around and when they catch their bearings, their account is blown.
Slower moving instruments will allow you to more time to react, verify, etc. (which may or may not be a bad thing). CL requires you to have your approach/setup down cold. A couple of wrong moves and it's curtains.
"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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