Oil futures trading is highly specialized, and it requires exceptional skill sets to build consistent profits. Many investors prefer to invest in the underlying companies that produce and sell crude oil or the exchange-traded funds (ETFs) that track this commodity. Others choose to trade the market’s volatile prices through futures contracts or options.More info :theinvestorscentre.co.uk
To buy or sell an oil futures contract, you must first determine if the price of crude is at a good buying or selling point. You can find this information by looking at an oil chart and deciding how much you’d like to risk per contract. If you’re new to the market, it’s best to start small, especially if you plan to trade using leveraged products such as options.
Oil Futures Trading: Risks and Rewards Explained
Once you’ve found the right entry point, you can then choose whether to go long or short on a futures contract. Going long means that you think the price of crude will rise. Going short means that you think the price will fall. You’ll be paid a margin profit or loss at the end of the contract when it expires, based on the accuracy of your prediction and the overall size of the market movement.
Traders need to be aware of the factors that can affect the price of crude oil, including supply and demand fundamentals, the views of OPEC, and geopolitics. They also need to keep an eye on weekly inventory reports from the U.S. Energy Information Administration (EIA) and the EIA’s forecast of global production and commercial consumption.
