Oil trading is the second main direction of the Golden FX. Oil trading differs from currency trading only in the size of the leverage and margin level. Let’s first understand what kinds of oil exist today on the market.
More often, two types are used for exchange trade:
Oil is a mineral that is a liquid substance, which consists of hydrocarbons and organic compounds with small impurities of metals. There are many kinds of oil, delimited by quality. The quality of crude oil affects its price. The most important characteristics of oil are the sulfur content (depending on this factor, oil is divided into low-sulfur and high-sulfur) and density (depending on the density, the oil is divided into heavy and light).
Most of all, low-sulfur light oil is valued in the market because with its help it is possible to get petroleum products (gasoline, diesel fuel, etc.) with less energy.
According to oil broker reviews, you can trade oil with Golden FX. You can make deals with both British and American oil. When trading, each closed contract has an individual duration. If you did not manage to close the contract during its operation, it will be closed automatically, so all orders will be canceled. If you decide to resume trading, then you will have the opportunity to open additional positions that will be calculated at the new rate and will have a different expiration date.
Oil trading is carried out 5 days a week, 24 hours a day. However, it is important to know the breaks, the start of trading and the end of trading. Break in trading on Brent crude oil is from 00:00 to 02:59 and WTI is from 00:00 to 00:59 EET (Eastern European Time).
The beginning of the auction – Brent is from 03:00, WTI is from 01:00 EET Monday, the end of trading at 23:59 EET Friday. During the break, you cannot put pending orders, change levels in current orders or modify pending orders.
The oil industry has been the most profitable for more than one decade. Track the activities of leading oil companies, bankruptcy cases are extremely rare there. Today, oil is an expensive commodity with high demand. Thus, you can see that oil trading at commodity markets is more than profitable.
You are an active participant in the exchange market – you buy and sell an asset. You can enrich yourself in the oil trade and significantly improve your investment portfolio if you properly analyze the factors that affect the formation of oil prices.
Oil prices depend on a huge number of factors that include:
You can trade using various methods. The main ones include:
In general, the volumes of oil trade have a common volume standard of 1,000 barrels per contract. But outside the Forex exchange, you can trade any volumes.
So, most often the heavy oil is traded on the oil broker platforms. Futures contracts for oil are obligations to purchase or sell a specific volume within a specified period (for example, within three months or half a year). The cost of the transaction is determined in advance. Such contracts are also called paper barrels, they give the ability to insure against fluctuations in the exchange rate. In addition, oil, as well as precious metals, has a high degree of volatility. This quality allows you to determine the changes in the exchange rate even for minimal time intervals and quickly get a good profit.
As it was already mentioned, a huge number of factors can influence the change in the cost of oil. Let’s consider each of them:
When trading oil, the US dollar is used. All transactions are conducted in this currency. It is much more convenient and simpler. If different currencies were used for trading oil, traders and other participants of the exchange would need to make many unnecessary actions. Today, oil can be regarded as an independent currency. As everyone knows, any modern national currency is equated to American dollars. Thus, the euro refers to the dollar, various national currencies refer to the US dollar, and it, in turn, relates to black gold. Therefore, you see that the price of oil sets the change in the exchange rate of the dollar, the national currency and the euro.
Brent is one of the most famous brands of oil in the world, applied to 2/3 of all oil, which is traded on the international market. Brent refers only to low-sulfur and light (low density) oil.
Crude oil brokers suggest that you sell oil on the most efficient platforms with high leverage, low spreads, and an exclusive newsline such as Golden FX.
Golden FX has special advantages for oil traders:
Contracts for the difference (CFD) of the cost of oil and energy resources.
One of the advantages of trading CFDs (contracts for difference) on Golden FX is the complete freedom to choose a trader. On Golden FX, you can trade CFDs for oil and other energy at market prices that are updated in real time, without any fees or additional difficulties.
You can trade for both rising and lowering the price of energy, while free analytical tools and materials will be available to you.
WTI oil (West Texas Intermediate) – the WTI brand represents all oil produced in the US. Its price is lower than that of Brent, as its transportation outside the US is much more expensive. WTI oil is traded on the NYMEX exchange.
Brent oil – this is oil produced in the North Sea and includes mixtures of Brent and Forties and varieties of Oseberg and Ekofisk. This grade is not only low-sulfur and light but also easily transported and, therefore, it is ideal for further processing and obtaining gasoline and diesel. Brent crude oil is traded on the ICE EUROPE exchange.
Some factors change the situation in the oil market. First of all, this is the demand for oil as fuel and its use in industry. Demand and supply are decisive factors for oil pricing – in particular, with a reduction in the flow of oil as a product from several major fields. Political instability also affects the price of oil – some major oil production zones are in unstable regions, and this affects mining.
Assessment of the prospects for price movement by market participants is very important for the formation of the cost of oil – in particular for short-term operations, which should be taken into account when brokering oil deals.
Golden FX provides a number of benefits, including a magnificent welcome bonus, to all novice and experienced investors interested in oil trading. Training materials, round the clock support, economic calendar, and daily analytics will help you succeed.