Crude Oil Trading System: Crude Oil HS

Liderbot's Crude Oil HS strategy highlights algo trading's potential in crude oil markets. Past performance is a guide, not a future guarantee.


Javier González-Barros, CFTe

3/8/20246 min read

Oil, commonly referred to as "black gold," is a crucial natural resource formed from the decomposition of organic matter over millions of years under specific conditions of pressure and temperature. This resource plays a vital role in the global economy, being fundamental for both the energy industry and the production of a wide range of derivative products.

Oil is indispensable for generating energy and manufacturing fuels that power everything from vehicles to power plants. Additionally, it is an essential component in the petrochemical industry, where it is transformed into everyday products and industrial materials.

Countries that possess and export oil obtain significant revenues, making a substantial contribution to the global Gross Domestic Product (GDP), with estimates exceeding 2%. Therefore, this resource represents a source of wealth and an energy cornerstone on a global scale.

Fluctuations in the price of oil directly impact the world economy. An increase in price can be an economic burden for importing countries, which must invest more resources in acquiring crude oil, while benefiting exporting countries with higher revenues. Conversely, a drop in prices favors consumers and importing countries but can result in lower incomes for producers, negatively affecting their economies.

The price of oil is determined by supply and demand in the global market. Major producers such as the United States, Saudi Arabia, Russia, Canada, and China play a significant role in its establishment. However, this price is highly volatile and can be influenced by political, economic, and social events, as evidenced by fluctuations caused by Brexit and the Covid-19 pandemic, which led to a decline in its value. Nonetheless, a price recovery is anticipated with the control of the pandemic and economic reactivation.

Introduction to the Crude Oil Futures (CL)

Crude Oil Futures (CL), traded on the New York Mercantile Exchange (NYMEX) division of the CME Group, are a pivotal instrument for investors and traders aiming to gain exposure to the energy sector. Each contract is denominated in U.S. dollars (USD) and represents 1,000 barrels of crude oil, with a price fluctuation of $0.01 per barrel. This detailed overview aims to shed light on the essential characteristics, benefits, and strategic considerations vital for effectively engaging with the crude oil futures market.

Essential Characteristics of Crude Oil Futures

Crude Oil Futures allow market participants to hedge against or speculate on the price movements of crude oil, one of the most actively traded commodities on a global scale. The contract size of 1,000 barrels and the minimal price fluctuation make these futures a highly sensitive and dynamic trading vehicle, reflecting the volatility and liquidity inherent in the global oil markets.

Trading on the NYMEX ensures access to a transparent, highly liquid market environment, facilitating the execution of trades at competitive prices. This accessibility is crucial for a wide range of participants, from individual traders to large institutional investors, enabling them to manage risk or seek profit from changes in energy prices.

The futures are settled in cash, offering a streamlined way to settle trades without the logistical complexities of physical delivery. However, physical delivery options are available for those market participants who require them, under specific terms and conditions.

Benefits of Trading Crude Oil Futures

Market Accessibility

Crude Oil Futures provide an accessible entry point for participants looking to engage with the energy sector, allowing for direct exposure to crude oil price movements without the need for physical handling of the commodity.

High Liquidity

The crude oil futures market is known for its high liquidity, ensuring that large volumes can be traded with minimal impact on price. This liquidity is essential for facilitating smooth entry and exit strategies, particularly for short-term traders.

Volatility and Speculative Opportunities

The crude oil market is influenced by a wide array of factors, including geopolitical events, supply and demand dynamics, and global economic indicators. This volatility presents numerous speculative opportunities for traders to capitalize on price movements.

Hedging Against Price Fluctuations

Producers, consumers, and investors in the energy sector can use Crude Oil Futures to hedge against price fluctuations, securing a predetermined price for future delivery. This hedging capability is critical for budgeting and financial planning in industries reliant on crude oil.

Intraday Crude Oil Systems

a black and white photo of an oil pump
a black and white photo of an oil pump
chart trading
chart trading

Crude Oil algorithmic trading system

Crude Oil HS," developed by Liderbot, tailored specifically for crude oil trading. This software is compatible with the isystems trading platform, offering accessibility across various brokers like ibroker or ninjatrader.

Costs of Crude Oil HS Algorithmic Trading

The "Crude Oil HS" strategy, categorized as an overnight or swing strategy, is a product of Liderbot's innovative approach. It presents a viable solution for traders seeking to diversify their portfolios through advanced algorithmic trading software designed for crude oil trading. The cost of renting the license for this strategy is $25 per month, making it an accessible option for those looking to leverage the potential of algorithmic trading in the crude oil market.

Historical Results of Crude Oil HS

An in-depth analysis reveals that Crude Oil HS has undergone scrutiny in 1535 trading sessions. Impressively, it boasts a 41.3% win rate, showcasing its efficacy in navigating the crude oil market. The accumulated total profit stands at $52,540, based on backtest data, underlining its potential to yield profitable outcomes through algorithmic trading.

Ability to Beat the Market Trading with Crude Oil Software

The performance of Crude Oil HS substantiates its capability to deliver substantial returns to investors. Since its inception on 07/06/2017, it has generated a verified profit of $11823, making it a lucrative option for investors across different investment capacities.

Performance Metrics in Crude Oil Algo Trading Strategy

Crude Oil HS exhibits impressive performance metrics. It records an average winning session of $1,435.24, further supported by positive Sharpe and Sortino ratios of 1.0813 and 3.6485 respectively. Additionally, with a maximum drawdown of ($3,840), the strategy effectively balances risk and reward, ensuring optimal trading outcomes.

The Crude Oil HS strategy by Liderbot signifies the potential of automated trading in the crude oil market. However, it's essential to recognize that past performance metrics serve as a guide and do not guarantee future returns. Investors should exercise caution and conduct thorough research before implementing any trading strategy.

Here are the statistics for the Crude Oil HS strategy:

  • Analyzed Sessions: 1535

  • Winning Sessions: 41.3%

  • Worst Drawdown: ($3,840) (08/10/2022)

  • Total Profit/Loss: $52,540

  • Current Run-up since DD low: $14,679

  • Current Drawdown: ($50) (02/01/2024)

  • Annual ROI: +59.1%

  • Best Session: $9,047 (07/05/2022)

  • Worst Session: ($1,490) (08/10/2022)

  • Profit Factor: 1.94

  • Winning Session Average: $1,435.24

  • Losing Session Average: ($519.22)

  • Commission per side: $12.50

  • Percentage Time with Open Position: 2.76%

  • Slippage per side: -0.0077 ($7.70)

  • TM Rating: 3/3

  • Sharpe / Sortino Ratios: 1.0813 / 3.6485

  • Sterling / MAR Ratios: 1.8310 / 1.1301

chart crude oil hs
chart crude oil hs
crude oil
crude oil

In previous posts, we've discussed a system for Gold and for Crude Oil . Below, we display the images. What would happen if we combine the 3 strategies into one?

jose gas naturaljose gas natural
deja vu deja vu

Algorithmic trading Software Porfolio

Let's create an algorithmic portfolio with the intraday Crude Oil Hs. the swing strategy Jose Gas natural. and the swing strategy for gold, Deja vu

Equity curveEquity curve
max drawdownmax drawdown

Equity Curve and Drawdown: 2017 to 03-08-2024

Trading Systems Portfolio: Jose Gas Natural & Crude Oil HS & Deja Vu

Generated with Lider Insights since 2017

The combination of the portfolio from the aforementioned three strategies has resulted in a net outcome of $296,126 from 2017 until today, March 8, 2024, with a maximum drawdown of $20,275. This net result accounts for contract execution fees, monthly rental fees for the strategies, and slippage. It's important to remember that past returns do not guarantee future results, and the worst streak of a system or portfolio is not the worst it has experienced but the one that may occur next. Welcome to the future of investments. This is an example of an Algorithmic Trading Software Portfolio for financial futures, available through iSystems on major global financial futures brokers.

You might be interested in