Aside from forex and stocks, there are other financial markets you can now enter without jumping through hoops. Online brokers are making it easy for new and existing traders to access different instruments from virtually anywhere in the world. As long as you have a computer and a working internet connection, you can make money from investing in the markets.
Commodities are among those investment instruments you can now access online, and crude oil is the hottest commodity of them all. In fact, it is one of the most lucrative commodities to look into, especially if you are considering a more diverse investment strategy. These next few tips will get you started with trading crude oil online.
Choose a Good Broker
One of the first things you want to do before trading crude oil as a commodity is finding a good broker to trade with. You have the option to trade crude oil with a forex broker, so be sure to check if your existing forex broker offers this commodity before continuing with the search.
Choosing a good broker isn’t as difficult as you think. You can read reviews and testimonials to get a better picture of what to expect in terms of service quality and coverage. You can also consult independent reviews for an objective look of the brokers’ platforms and services.
At the same time, you want to dig deep into the details and compare brokers based on factors like spread and cost per transaction. You want to make sure that you are getting the best deal on each position you open, to maximize your profits.
Understand the Factors
There are two main factors that influence the crude oil market: supply factors and demand factors. Supply factors are easier to figure out as a fundamental factor, mainly because you can access a lot of news about supply issues these days. Outages and news from global oil suppliers will affect the market almost immediately.
Demand factors, on the other hand, are usually based on long, more complex data about consumers. There is also seasonality, another factor that needs to be considered if you want to time your open positions carefully. Knowing when oil consumers need more fuel and consume oil at a higher rate will help you capitalize on the market better.
Risk Management Is Key
Yes, fundamental analysis is important, and technical analysis will help you understand the way the market moves on a deeper level, but you must never forget to have a clear risk management strategy when trading crude oil. You need to know why you enter the market and when – and how to exit.
Setting a Stop Loss and a Target Profit isn’t enough. TPs and SLs are there only as a part of your personal trading strategy. The more you understand the crude oil market, the more refined your risk management strategy will be, and the more flexible you can be with your open positions.
So, are you ready to conquer the crude oil market? If you can make money in the crude oil market, nothing will stop you from conquering other commodities.
The Yucatan Times Newsroom
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