Oil is a vital resource that powers the world’s economies. It is also a popular investment and speculative market. The price of oil is driven by global economic and geopolitical factors that impact supply and demand for the commodity.URL :theinvestorscentre.co.uk

Trading in the oil markets requires a combination of technical analysis (the study of charts) and fundamental research on the market drivers, including OPEC decisions and the outlook for the economy. You should have at least a basic understanding of risk management and money management, especially when trading with leverage.

Is Oil Futures Trading Suitable for Beginners

One of the unique characteristics of this market is its volatility, which can drive prices quickly on news or events that affect oil supply or demand. This volatility provides traders with ample opportunities to realize profits, but it can also create losses if your timing is off even slightly.

Traders can trade oil directly by purchasing crude futures contracts on the New York Mercantile Exchange with a margin requirement that varies from two to five percent. Investors can also gain exposure to the oil market indirectly through mutual funds and exchange-traded funds (ETFs) that offer equity access to major oil companies or a basket of them.

Oil is a heavily correlated market with other asset classes, including equities and fixed income investments. Investors can use correlation levels to inform their investment strategies and make trading decisions. Traders can also take positions in the physical crude oil market, where they can buy or sell a barrel of the commodity that is to be delivered by the expiration date.