Guide to investing in crude oil trading

admin | January 4, 2021 | 0 | Finance


If you read newspapers every day then you must have seen news like, ‘Crude Oil Price Forecast’ or ‘Crude Oil Market Continues to Rise’ at some point. Did you ever feel curious to know about crude oil trading? If you did not, it is high time you learned about this market.

But before moving to know crude oil trading, let’s first discuss a bit about crude oil

What is crude oil?

Crude oil is a natural resource composed of hydrocarbons deposits and other organic materials which are usually extracted from earth’s crust.

In simple words, crude oil is a type of fossil fuel and used to produce products like gasoline, diesel, jet fuel etc.

Similar to Forex trading and the stock market, crude oil has a huge trading market. But what makes crude oil valuable for trading? To learn more about crude oil, visit this link. Many novice traders in Hong Kong have mastered the basics just by using the premium posts of traders at Saxo.

The reason behind is that crude oil is one of the most important fuel sources and over one-third of the world’s energy consumption is met by crude oil. This natural resource is highly appealing to various industries that heavily rely on fuel consumption. The demand for crude oil is really high in sectors like plastic industries, airlines, infrastructure etc.

Again, since crude oil is extracted from deep inside the earth, its extraction, refinement, and the infrastructure to support it involves a huge amount of investment. That’s why the overall value of crude oil becomes very great. It is desired by many. As many industries and economic sectors would fail without crude oil, it has created much scope for traders to invest their money. That’s why the crude oil market is considered as an important trading field.

If you want to trade in this sector by implementing planned strategies, this valuable commodity can provide you with a high-profit gain. However, before you start your trading, a set of secured strategies can help you produce a positive result.

So here are some tips that can help you to make consistent profit in this market.

1. Learn about the market

Trading markets are always prone to frequent fluctuations and crude oil trading is nothing different. The rate of supply and demand can easily move the value rate. Whenever there’s an oversupply or a decrease in the extraction of crude oil, the price of crude oil may increase by many folds. Again, in the opposite situation where demand is less than supply, the price falls gradually.

Again, the price may fall or rise depending on a global situation. That’s why, before you make your bids, you need to try to understand how the market works.

2. Know the traders

In this market, there are both retail and wholesale traders. While retail traders exert less influence, professional traders tend to dominate the market. However, the influence of retail traders increases when the market goes into an uptrend attracting many day to day traders. A crude oil trader can make up to $150,000 per year.

3. Primary markets

Like all other trading sectors, crude oil trades through primary markets and the primary markets are generally classified into two types i.e. WTI and Brent crude. WTI is a USA based primary market while Brent focuses more on North Atlantic fields.  The main difference between these two primary markets is their differences in the quality of their products. In recent days, Brent has been a good indicator of worldwide crude oil pricing while the WTI is heavily traded around the world.

4. Price charts

Trading in this sector require long term market analysis in order to build consistent profit traders who want to trade crude oil, at first should put emphasis on the long-term price history before they start bidding. For that, a price chart can come in handy. Reading and analysing a chart not only allows you to learn the past price rates and current rates but also enables you to predict the future prices. This is an important trait to develop to gain profits in this sector.

There are several ways to trade virtually so that you canenter the market fully prepared.

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