“Sign seen at an LP bank market maker for the WTI Crude Oil CFD!”
Of all the markets trading today, without a doubt, crude oil is my favorite
trading market hands down … choose your blend, meaning either WTI
traded in Murder, Illinois at the CME, or Brent traded at the ICE. On
Friday, WTI had volume of about 1.083 million contracts, and Brent had
about 500,000 contracts traded … most people choose WTI, cuz it usually
has higher volumes & liquidity, but their are valid reasons to choose either.
There isn’t a market anywhere that gives you the action oil gives … to great
a world market for Western governments to intervene, unless there are
special extraordinary circumstances … governments use “jawboning” to
effect their wants and needs, sometimes successful and many times not.
The problem for traders, though, especially smaller traders, is that a futures
contract 1 lot = 1,000 bbls of oil, and that means ± $10 per one penny move
per 1 lot … and given the fact that oil on a slow day will see roughly a $1
range, and plenty of up/down action, for a small account on the wrong side of
these moves, it can be a killer.
Well, what about the offshore brokerage houses and their CFD’s in oil? … In
short, they are ALL … and I mean ALL … complete rip offs. Some houses will
have 1 lot CFD’s = 10 bbl., and some will have a 1 lot CFD = 100 bbl., but the
problem here is not the size of the CFD, the problem here is twofold: 1) the
bid/offer spreads are enormous, and 2) slippage on fills can be gigantic.
Turnkey loves to brag that they have the very best WTI and/or Brent oil
CFD’s in the market … even if true and you accept their premise, it’s still
rotten to the core and will lose you money. Turnkey’s bid/offer spread is
usually 4 - 5 cents a bbl. They use this floating bullshit spread idea to fill you
at 5 while you’re looking at 4 … many times, though, the spread will balloon
to 6 or 7+ … now, even with this size of spread, there will still be slippage of
1 - 3 cents per bbl. on almost every trade … add in RT commissions, and if
you trade this consistently, they will take all of your money.
You also get no help from the corrupt CME, which has their emini WTI oil
futures, which have 2.5 cent bid/offer spreads … Friday, this complex traded
about 18,500 contracts, utilizing 500 bbl contract size [½ the regular futures]
… add in slippage in this thinly traded POS, along with RT futures
commissions, and again you are at a big disadvantage.
At Turnkey, a 1.0 lot of crude [WTI or Brent] = 1,000 bbl., and you trade it in
multiples of 0.01 increments … so, if you traded the minimum, which is 0.01
lots, your trade size would be 10 barrels … so, Turnkey gives you a little more
flexibility in terms of trade size, but their oil LP’s are nothing but thieves.
The main LP tried telling me once, that their pricing isn;t off of futures, but
the cash market in Cushing, Oklahoma … yea, right, sure … you believe this,
and I got beachfront land in Kansas to show you … ask them how they price
their CFD and what it’s based off of, and you get silence … press them on this,
and they simply say it is proprietary … of course it’s proprietary, cuz you’re
stealing money.
And quite frankly folks, it doesn’t look like anybody is willing
to take on the CME and tell them to pound sand … the only hope for the
future, is something pegged onto a foreign oil futures contract, but we’re a long
ways from that happening … bottom line, is that it’s futures or it’s nothing.
Lately, WTI is stuck tracking trading in the SP500 … stocks go up, oil goes
up … stocks get hit, oil goes down … until OPEC+ meets in June, all I see are
traders playing the 61-ish - 63-ish range, and trading accordingly … until
there are clearer signals about Iran & Venezuela, and what the Ruskies are
going to do with their production, and what happens to global oil demand if
China & the U.S. can’t make a trade deal, who’s gonna be the one to press
either side of this range? … yea, me neither.
So, look for more endless chop this week with spurts at the edges looking for
stops … other than that, it’s a waiting game to the OPEC+ meeting.
Have a great rest of your weekend everybody!
-vegas
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