Trading Oil Online

One of the most popular commodities for traders, Trading Oil Online is used to power vehicles and generate electricity as well as manufacture everyday products. It is also a key element in global energy markets and it’s not uncommon for oil prices to fluctuate significantly on geopolitical events, oil production and supply-demand dynamics.

Understanding what moves the oil market is an essential component to any trader’s arsenal. Traders can speculate on the price of oil by using contracts for difference (CFDs), a type of derivative that gives you direct access to the oil futures market without having to take physical delivery of barrels.

Trading Oil Online: Platforms & Tips for Success

CFDs are traded on margin, meaning you can open positions with as little capital as you wish and you can use leverage to magnify your market exposure. As crude oil is a highly volatile commodity, trend-following strategies are a popular option with traders. This involves opening a position in the direction of the market’s movement and closing out your trade when the market’s momentum reverses.

Alternatively, you can trade the price of crude oil by purchasing or selling the commodity’s futures contracts. Oil futures are used by companies to hedge against adverse price movements and they’re a popular tool for speculative traders too. Oil options, which give you the right but not the obligation to buy or sell a specific number of oil futures contracts at a price specified in the contract, have a higher initial cost than CFDs and are more suited for those with plenty of spare time since they require regular monitoring.