Over the last few articles we have given ideas on how to enter these markets for profit and achieved some great gains. In this article we will look at how to get in on the action, if you are on the sidelines.

Many traders fail to trade energy markets correctly (and others!) Why? because they use the wrong way to time their entry and they use the wrong trading vehicle.

Lets look at a way to enter in a real time scenario.

Were on board already and have profit, but how do new traders get in lets take a look.

Firstly Ignore the news and look at what the charts are telling you.

Crude Oil & Unleaded Gas

The markets are in a period of consolidation and prices have just moved from the bottom of the Bollinger band and are testing the mid band.

Short term trends are up, with stochastic momentum supporting the move, but are a bit over bought.

If want to buy now, you are trading with the trend in your favour ( but watch the stochastic closely and its strong before entry) traders should use options with plenty of time to expiry and buy them at or in the money.

This will help you to ride out any volatility or an unexpected swing to the downside and place stops bellow support.

You may want to wait for a pullback, but if momentum is strong today the odds favour higher prices.

A close above the mid Bollinger band points to higher prices. If prices follow through to market highs a break of these highs leaves clear blue sky for a larger advance.

Natural Gas

Prices have had a swift break to the upside and are re tracing part of the recent break. Prices have double bottomed at the mid Bollinger band and are trying to find support.

Dont jump in to quickly

Would we buy at these levels? The answer is no. Quite simply, there is no buying and short term momentum indicated by the stochastic indicator has not yet turned up.

If a trader buys here, they are trying to pick a near term bottom and predict the move.

Its better to wait for confirmation and buy strength. You will miss part of the profit but that will be in hindsight.

Many traders go in and try and predict where a bottom will form, but the best way to trade is to buy strength, not weakness.

Two great tools to help you

The Bollinger band and stochastic indicators are great for helping you define your entry and exit points and also giving support and profit objectives.

Protect yourself

Energy markets are volatile and trader psychology rules not the fundamentals and these markets can wrong foot traders who are to keen to get in and dont give themselves the protection of a vehicle like options.

Time your entries on strength and use options to ride out swings to the downside.

Finally dont buy out the money options keep them in, at or close to the money and get time on your side.

Energy markets are volatile and can make any trader look stupid but they offer some fantastic profit opportunities at present which traders can take advantage of.