The Basics of Online Oil Trading

These modern times, crude oil and it’s by products is considered to be the most important commodity in the world.  The faster the growth of an economy, the more they need this commodity.  It practically fuels everything and so the demand is really great therefore, progressive nations and developing countries have very high demand for crude oil.  Aside from the law of supply and demand, the political situation in countries producing this – like the Middle East also affects its price.  That is why its price is variable.

Trading crude oil has been practiced in the past ten years.  And thanks to modern technology, people who are into oil trading now have the ease of doing it online.  Companies or trading platforms like Bforex and Saxo Capital Markets provide this channel.  Trading of crude oil is done with the US Dollar as the currency.  This is priced per barrel with leverage of 1:200 and spreads are fixed at 6 pips.

How to Trade Price of Oil Commodity Trading The Basics of Online Oil Trading

80x15 The Basics of Online Oil Trading
“Investing and Cooking with Oil”4799 by BobPetUK, on Flickr. This work is licensed under a Creative Commons Attribution 3.0 Unported License.

The procedure is relatively simple.  The trading is done directly over the counter (OTC) by the buyers and sellers.  There are no third parties and it is settled in cash.  Each party is on the lookout of the movement on the prices of the commodity brought about by various factors.  Should there be higher demand, the price goes up.  Recession gives the opposite effect and this is where prices drop.  This is where gain and loss is determined at the end of the trading period.  Doing it online eliminates the need for physical presence and monitoring by both parties is done in the comfort of their homes and offices or wherever they may be.  The latest advancement in technology makes this possible.

When doing online oil trading, it is important to look upon the various promotions of each trading platforms.  Be on the lookout on no re-quotes as these are expensive, low transaction cost, advanced charting to keep track, generous leverage and with hedging capability.  These packages change from time to time so it is good to be updated with what is the current package.

Trading platforms such as Easy-Forex doesn’t roll over deals that are expiring to the new contract unless advised beforehand.  The player should contact directly his ASM or dealer one working day before the expiry of the deal in order to renew.  It should also be noted that renewals will not carry the profit or loss to the new deal.  As soon as the old deal is closed automatically, the dealer will open a new deal with a new expiry date in the succeeding month.  The margin on the renewed deal will be carried on to the new one unless another instruction is given by the client.  The new month’s rate will also apply.  It is therefore important to be always in touch with your dealer for further clarifications.

Online oil trading requires constant monitoring on the rise and drop of oil prices.  You have to be always on the lookout for opportunities to choose good deals and make your money grow by just clicking your fingers.

 

About the Author:  Mackenzie Salis is a freelance writer, a professional blogger and an enthusiast advocating finance awareness via online exposures for 3 years.  She is the author of the site:  Consumer Credit Counseling Service that can provide all valuable information about loans and warn you against fraud online.

This article is a guest post.  If you would like to write for Money Soldiers, you may visit the Write for Us menu for details.

 The Basics of Online Oil Trading

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Comments

  1. Nice Blog, Good information about stock market, it is very informative
    and helpful. I always ready to read this type of blogs.
    Regards:
    commodity online

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