The Most sensitive commodity to the smallest imbalance in the global economy (let alone a war) would be without a shadow of a doubt would be “Crude Oil”. Midst of the Russia-Ukraine war which was looming for some time, but finally started on 24th Feb 2022, the greatest winner if any has been the rise in the price of energy-related products (specifically Crude Oil). The Brent Crude prices have seen a massive shift and jump and it is only a few dollars away from all-time high prices.
The all-time high price of Brent Crude is $147.50 (achieved in July 2008) and we breached the levels of $130 on Monday morning of 7th March 2022 and the increasing Global tensions and fresh sanctions on Russia from various parts of the Globe, the sky seems to be the limit for Crude Oil prices.
In India, the crude oil prices are derived from the WTI (West Texas Intermediate) crude. Generally, it is assumed that Crude oil trading is a Big Boys game. But even the retail players actively participate in it. So, now the big question, If You Were Trading Crude Oil Now, How Much Would You Make? Let us Find out:
(Source: zerodha.com, Crude oil March Futures Price)
- Crude Oil Price (Trading on MCX) in India on 25th Feb, 2022 = 7,000 (Actual Low of day is 6,775) per lot
- Value of 1 tick movement = Rs. 100
- Margin Required to Trade 1 lot (at 7000 price) = Rs. 153040
- Current Price of Crude oil March Contract = 9600
- Change in Price over last 6 Trading Sessions = 9,600 – 7,000
= 2600 ticks
- Potential Total Profit if you were to hold your position till now = 2600*100
= Rs. 2,60,000
- Return Generated against the Margin used = (260000/153040)*100
= 170%
Now the question which comes to your mind is it actually possible to catch a move of such magnitude. The answer to that is, “YES”.
- We could use the method of trailing stop loss. All we had to do was keep stop loss below the previous day close or any other important level and ride the wave.
- The other simple way would be to enter the market with multiple lots (say 2). And keep scalping with one lot and hold the other one for a longer time view. This is the trick which is used by most of the full time traders.
A move of this magnitude is a dream for any commodity trader. And if you are someone who likes a trending market then this market is the stuff made of dreams. Don’t feel that you have missed out on this move because this could just be the start of the move and Brent crude could be on its way to breaching an all-time high.
Disclaimer
The content in this news article is not investment advice. Investing in equities or commodities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks or commodities. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article.
