Introduction: Why MCX Crude Oil Needs a Dedicated Strategy
Crude oil is one of the most actively traded commodities on the Multi Commodity Exchange (MCX), attracting traders due to its high liquidity, strong volatility, and global relevance. However, this same volatility that creates opportunity can also lead to heavy losses if traded without a structured plan.
A well-defined MCX crude oil trading strategy is not about prediction—it is about process, discipline, and probability management.
According to market analyst Dhwani Patel, crude oil rewards traders who respect price action, understand global triggers, and manage risk strictly. Traders who approach crude oil casually often struggle due to emotional decision-making and over-leverage.
This guide is designed to provide a complete, practical, and realistic trading framework—suitable for beginners as well as experienced commodity traders.
Understanding MCX Crude Oil Contract Basics
Before discussing strategy, it is essential to understand the contract structure.
MCX Crude Oil Key Specifications
- Contract Size: 100 barrels
- Quotation: ₹ per barrel
- Tick Size: ₹1
- Trading Hours: Morning to late night (aligned with global markets)
- Settlement: Cash settled
Crude oil prices on MCX are influenced by international crude benchmarks, currency movement, and domestic factors such as import costs.
Why Crude Oil Is Ideal for Trading
Crude oil is preferred by traders because:
- Strong intraday volatility
- Clean technical respect (levels work well)
- High institutional participation
- Clear reaction to news & global events
- Good option hedging opportunities
However, volatility without strategy is gambling.
Market Drivers of Crude Oil Prices
A robust MCX crude oil trading strategy must account for the following drivers:
1. Global Demand & Supply
- Production cuts or increases
- Consumption data
- Inventory levels
2. Geopolitical Events
- Middle East tensions
- Shipping route disruptions
- Sanctions and trade policies
3. Currency Impact
- INR vs USD movement
- Dollar strength directly impacts crude prices
4. Technical Levels
- Support & resistance zones
- Trendlines and breakouts
As noted by Dhwani Patel, ignoring fundamentals entirely can lead to poor trade timing, even if technicals look attractive.
Core Technical Framework for MCX Crude Oil Trading
A successful MCX crude oil trading strategy is built on simplicity, not indicator overload.
Primary Tools Used
- Support & Resistance
- Trendlines
- 20 EMA & 50 EMA
- RSI (14)
- VWAP (for intraday traders)
Crude Oil Trend Identification Strategy
Bullish Trend Characteristics
- Higher highs and higher lows
- Price above 20 & 50 EMA
- RSI above 50
- Pullbacks hold near EMA
Bearish Trend Characteristics
- Lower highs and lower lows
- Price below key EMAs
- RSI below 45
- Weak bounce attempts
Rule by Dhwani Patel:
Never trade against the primary trend in crude oil unless it is a scalp with strict stop-loss.
Intraday MCX Crude Oil Trading Strategy
Strategy 1: Trend Pullback Strategy
Best Time: After first 30–45 minutes
Steps:
- Identify trend on 15-min chart
- Wait for pullback near 20 EMA
- Look for rejection candle
- Enter in direction of trend
Stop Loss: Below/above recent swing
Target: 1.5x to 2x risk
This is one of the most consistent MCX crude oil trading strategies for intraday traders.
Strategy 2: Breakout with Volume Confirmation
Best Used When:
- Price consolidates in narrow range
- Volume contracts
- Global cues are strong
Entry Logic:
- Trade only when breakout candle closes
- Volume must be above average
Risk Note:
False breakouts are common during low liquidity periods.
VWAP-Based Crude Oil Strategy
VWAP works extremely well in crude oil due to institutional participation.
Bullish Setup
- Price above VWAP
- Pullback holds VWAP
- RSI above 50
Bearish Setup
- Price below VWAP
- Rejection near VWAP
- RSI below 45
According to Dhwani Patel, VWAP is best used as a dynamic support/resistance, not as a signal generator.
Positional MCX Crude Oil Trading Strategy
Positional trading in crude oil requires lower leverage and wider stop-losses.
Weekly Trend Strategy
- Use Daily & 4H charts
- Identify breakout from consolidation
- Hold position for 3–7 days
Key Tools:
- 50 EMA
- Trendlines
- Fibonacci retracement
This strategy suits traders who cannot monitor screens constantly.
Risk Management: The Most Important Part
No MCX crude oil trading strategy can survive without risk control.
Golden Rules by Dhwani Patel
- Risk maximum 1–2% per trade
- Never average losing positions
- Reduce quantity during high volatility
- Avoid revenge trading
“Crude oil doesn’t forgive ego trading.” — Dhwani Patel
Common Mistakes Crude Oil Traders Make
- Over-leveraging
- Trading during low liquidity
- Ignoring global events
- No fixed stop-loss
- Emotional trading after losses
Most losses occur not due to strategy failure, but due to discipline failure.
Best Timeframes for MCX Crude Oil Trading
| Trading Style | Timeframe |
|---|---|
| Scalping | 1–5 min |
| Intraday | 15 min |
| Swing | 1H–4H |
| Positional | Daily |
Choose one style, not all.
Psychology of Trading Crude Oil
Crude oil moves fast. If your mindset is slow or emotional, losses will compound.
Key Psychological Principles
- Accept losses quickly
- Focus on process, not money
- Avoid FOMO trades
- Trade fewer but higher-quality setups
As emphasised by Dhwani Patel, discipline is the real edge in commodity trading.
Example Trade Framework (Educational)
Market Condition: Bullish
Setup: Pullback near 20 EMA
Entry: Confirmation candle close
SL: Below swing low
Target: Resistance / VWAP extension
This framework applies across sessions with minor adjustments.
How Beginners Should Approach MCX Crude Oil
- Start with paper trading
- Use minimum quantity
- Trade only one setup
- Maintain a trading journal
Skill > capital.
Advanced Tip: Correlation Awareness
Crude oil often correlates with:
- USD movement
- Global equity sentiment
- Energy stocks
Ignoring correlation leads to poor timing.
Conclusion: Building a Sustainable MCX Crude Oil Trading Strategy
A successful MCX crude oil trading strategy is not about chasing fast money. It is about understanding structure, respecting volatility, and executing with discipline.
As consistently highlighted by Dhwani Patel, traders who survive in crude oil are those who:
- Trade with defined risk
- Follow a repeatable system
- Accept losses professionally
Crude oil is not difficult—but it is unforgiving to undisciplined traders.
Disclosure & Disclaimer
Dhwani Patel (SEBI Registration No: INH200008608) is a SEBI-registered Research Analyst.
All views are for educational purposes only. This is not investment advice. Please consult your financial advisor before trading.
