Trading in crude oil has been the stalwarts of the commodities market for many years. Is it the right focus for you, though? We are here to help you determine if oil trades can be beneficial to your portfolio or not.
Although it’s called ‘Oil Trading’ colloquially, oil trading cover far more than you might think. Remember that crude oil is at the heart of anything that has a combustion engine- petrol, oil, diesel, even paraffin demand, all has an impact on this market. Although it may seem intimidating at first, it's quite the contrary. There are very good indicators that will tell you how oil trends usually fluctuate.
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We at CM Trading believe that oil trading can offer your portfolio a lot of advantages. These include:
Although it may seem a bit intimidating at first, it's actually very easy to understand how to leverage oil trades to your advantage. There are a few key principles a lot of traders swear by: Firstly, know your two benchmarks. Brent Crude is a sweet, low Sulphur and light oil. It mostly comes from the European North Sea. WTI is also sweet and light, but it's made in the US. Both prices are typically reported.
Don’t discount politics- typically you need to consider Europe, Russia, the US and the OPEC countries (the Middle East and South America) and China is a rising player. Consider global and domestic production if you’re in an oil producing country. Remember drilling for oil is expensive and that’s why they keep trying new techniques. Ultimately, Demand is what drives the production. These are the driving factors around oil prices and this can help you a lot with your trading!
Always keep on top of the news to know how these different factors are playing off of each other. You could have high global demand and low domestic. OPEC could be withholding supplies. Fracking sites could be opening. All of these will affect the oil market. Past that, some time spent with past market figures (while never indicative of future performance) will be all you need understand the basics of the oil market and its quirks. Oil trading needn’t be hard, especially if have CM trading’s platform. Start trading oil with CM Trading.
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Trading Foreign Exchange (Forex) and Contracts for Differences (CFD’s) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin.
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