How to Trade in MCX CrudeOil and NG using Option C

Key Rules for Trading in MCX

Line Drawing and Deletion

• Do not delete lines: Once drawn, lines should remain; minor changes do not matter.
• Draw lines on small candles: Avoid large candles as they affect premium and Greeks.
• Respect drawn levels: Lines often hold historical value and are typically valid.

Candlestick Selection

• Use minimum 15-minute candles: 5-minute candles are ineffective.
• Draw lines only when small candles are forming: Large candles cause discrepancies.

Market Conditions and Timing

• Market Hours: 9:00 AM to 11:30 PM, but best to trade until 10:00 PM.
• Effect of European Markets: Best movements often between 2:00 PM to 3:30 PM and 6:00 PM to 9:30 PM.

Overnight Holding

• Special fund requirements: Different funds needed in Zerodha for MCX trading vs. NSE trading.
• Fund availability: Funds used in MCX trade won’t be available for NSE trade overnight.

Trading Strategy

Priority of Indicators

1. First Priority: Open Interest (OI) ± Change: Major indicator for support and resistance.
2. Second Priority: OI Change: Secondary indicator after initial OI levels.
3. Third Priority: Volume: Given lowest priority among indicators.

Support and Resistance Levels

• Example: Crude oil’s current support at 7700, resistance at 7800.
• Level Checking: Confirm levels through indicators like OI, volume, and graphs.

Trade Execution

• Trade Timing: Avoid trades during running candles; wait for confirmation in the next candles.
• Entry/Exit Strategy:
  • Entry: when a 15-minute candle closes below the resistance level.
  • Exit: when candle closes above the set stop-loss level.
  • Avoid Fear: Large candles may form but wait for them to close properly.

Specific Practice Tips

• Avoid 50-Level Strikes for Trading: e.g., 7750, 7650. Focus on full levels like 7700, 7800.
• Natural Gas vs. Crude Oil: Beginners should prefer crude oil over natural gas.
• Check Major Indicators: Prioritize checking OI, OI Change, Volume before making any trading decision.

Example Analysis

• Crude Oil Analysis: Current level at 7706, significant support at 7700, resistance at 7800. Check OI graphs for detailed insights.
• Buy Strategy: Considering a put option if candle at 7700 level closes below it with target down to 7674.

Final Tips

• Building Patience: Essential for successful trading, especially with commodities like crude oil and natural gas.
• Continual Analysis: Market analysis should be repeated with each new trading day.

Note: Approach remains consistent across other MCX instruments like gold and silver. Always wait for market stability before drawing levels.

Related posts:

Chapter 3 | Defining Support and Resistance Chapter 4 | Types of Support and Resistance Free Community Class and Nifty Post Market Analysis of 15th July and QnA By Gopal Sing Sir and AOC Team Chapter 1 | Introduction to AOC