Forget Chinese Commodity Speculators, Meet North America's "Moms-and-Millennials" Oil Day-Traders

We showed you the "bored" Chinese workers who traded commodity futures for excitement - Now, it's time to meet North America's oil day-traders... moms-and millenials.

The recent volatility in crude oil has gotten the attention of people who do not list trading as their day job, but are randomly attempting to day trade oil anyway the WSJ reports.

Take for example Erika Cajic, a 45-year old full-time parent who took a shot at trading oil via UWTI.

When Erika Cajic woke before dawn one morning in early May and read that wildfires were breaking out in an oil-producing region of Alberta, she sat down on the family room couch with a cup of hot chocolate and her laptop and bought shares of an investment linked to crude.

 

The 45-year-old full-time parent of two in Mississauga, Ontario, like many investors, reasoned that the production outages would drive up the price of oil. By buying the VelocityShares 3x Long Crude Oil exchange-traded note, she tripled down on her hunch, as the product uses derivatives that aim to rise and fall at triple the daily change in oil.

 

Within about four days, she estimated she made about 500 Canadian dollars (US$384) on those trades after converting from U.S. dollars.

 

“The swings are gigantic lately,” she said of the product, known by its ticker UWTI, and the other energy products she has traded in recent months.

For Matt Krasnoff, an employee of LinkedIn, he just keeps his trades displayed on Yahoo Finance on his computer screen during the day and monitors his trades at work.

I just thought, let’s throw a couple of hundred dollars in it...and try it out,” said Matt Krasnoff, 26, of New York, who bought shares of UWTI last year after hearing about it from a friend. “I just enjoy the risk and the thrill of the market in general.”

 

Mr. Krasnoff works at LinkedIn Corp. in New York and keeps a list of his investments displayed on Yahoo Finance on his computer screen during the day. He said he typically invests in technology companies that he is familiar with and reads articles about the industry and watches Twitter to stay up to date.

 

He ditched UWTI within a few months of trying it, after he lost money. “It was outside of the realm of what I knew...the last straw was realizing that I wasn’t informed enough,” he said.

 

Now, he says, he is going to stick to investing in what he knows, like tech.

CME estimates that crude oil has been its second most traded contract among retail investors this year after the S&P - such investors make up about 10% of the daily trading volume said Mark Omens, executive director of retail sales at CME.

 

Frederick Bailey, of Savannah, Georgia is inbetween jobs so he figured he would put some money into UWTI in January as crude broke $30 a barrel. Although at least Bailey had some dealings with ETF's in the past.

Frederick Bailey, 59, of Savannah, Ga., said he put a modest amount of money in UWTI in January as crude broke below $30 a barrel and rode it higher as oil prices rebounded. Mr. Bailey, who said he is between jobs, once worked at banks that dealt with exchange-traded funds.

 

Mr. Bailey also visits online chatter sites talking about oil, such as StockTwits, where one poster this week wrote: “...once again the crude been rude to this dude.”

It also appears that millennials in their spare time at their parents house are also fans of day trading crude oil and related products on their smart phone.

Grant Heimer, a 25-year-old in Dallas, trades stocks as a hobby and learned about commodity exchange-traded products from his friends last year, he said.

 

An energy-industry software consultant who studied finance in college, he has traded oil and natural-gas exchange-traded products a few times using a smartphone app called Robinhood.

 

“Oil just seemed to make a lot of sense to me,” said Mr. Heimer. He has never held a position longer than five days and still has most of his portfolio in stock investments. Most of his oil trades made money, he said, but not all.

 

“I’m not careless,” said Mr. Heimer. “It’s a very appealing thing to do for somebody like me who’s OK with a small risk and a short amount of time.”

Archna Jagtiani started trading on her own after the market came back after the crisis but her account had not recovered. She once traded exchange traded products but now trades futures, with a holding period of 15 minutes.

Archna Jagtiani, a 42-year-old who lives in the Chicago suburbs, started trading after the financial crisis. “After 2010 when the market was up...my account had not come back and I was just paying fees,” she said. “It’s better this way. I cannot blame anybody if I lose money.” She said she spends her days trading and tutoring kids in math after the market closes.

Ms. Jagtiani used to trade oil exchange-traded products, but a few months ago switched to buying and selling oil-futures contracts because of the quirks of holding some oil exchange-traded products for a long period of time.

“If oil goes from $43.50 [a barrel] to $43.70, you’ve made a hundred bucks,” she said of oil futures, which she holds for intervals as short as 15 minutes.

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Well, while we're not saying that the "professionals" do any better, we suspect that the 'passive day-trading' as a hobby may not be the best idea for those looking to preserve any discretionary income that may be left over after paying the monthly bills.