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The Weekend Oil strategy

Description

The Weekend Oil strategy is designed to trade the US WTI crude oil. This trading strategy was designed by Mike Rückert. In 2018, Traders’ Magazine published an article describing the Weekend Oil strategy.

These are advantages of the Weekend Oil strategy:

  1. Easy to understand, easy to implement.
  2. High liquidity in crude oil futures and CFDs.
  3. Published in a respected magazine.
  4. Good performance over 10 years.
  5. Good performance even in a bearish oil market.
  6. No overnight risk.
Suitable for : US WTI crude oil
Instruments : Futures and CFD
Trading type : Daytrading
Trading tempo : 1 signal on Friday
Using NanoTrader : Manual or (semi-)automated
 

The strategy in detail

Investing and trading based on seasonal effects (harvest cycles, weather cycles…) and market effects (weekend gold, end of month cycles…) is done by many professional investors since a very long time. Some of these effects occur intraday. The Weekend Oil strategy tries to benefit from such an intraday effect.

Contrary to many seasonal and market effects, which are analysed in a plethora of academic papers, not a lot of information is provided on why this intraday effect on the US WTI crude oil occurs. Nevertheless, the back-test appears very impressive.

This illustration shows back-tested results (10 years) for the Weekend Oil strategy as available in the platform and described by the author in Traders’ Magazine.

Free oil trading strategy.

This illustration also shows back-tested results (10 years) but with a few modifications by WH SelfInvest. The objective of these modifications is to reduce the long sideways period, which is visible in the back-test above.

Good US WTI crude oil trading strategy.

When to open a position?

A position is bought at the market price on Friday afternoon, a few hours after the US market opens. The buy is only executed if a pre-condition is met: the close price of the previous day was above the 5-day moving average price.

 

When to close a position?

Typical for strategies based on market effects, the Weekend Oil strategy uses a time stop. The position is closed the same Friday, after three hours. The strategy also uses a stop loss and a profit target. The price levels of these two orders are, however, far away from the market. Therefore, they are rarely executed. The position is nearly always closed by the time stop.

This example shows a typical Weekend Oil trade. Given that the position is actually opened and closed before the weekend, the strategy’s name is somewhat of a misnomer.

Weekend Oil trading strategy Mike Rückert.

Investui.
 

Practical implementation

Using the NanoTrader follow these steps:

  • Select the instrument you want to trade and open the chart.
  • Select the strategy in the WHS Strategies folder.
  • If required, adapt any parameters as described above.
  • For semi-automated trading, activate TradeGuard+AutoOrder in the chart. For automated trading, activate AutoOrder in the chart.