How To Trade Oil Futures

How To Trade Oil Futures – CFDs are complex instruments. 74% of retail client accounts lose money when trading CFDs with this investment provider. You can quickly lose your money through leverage. Make sure you understand how this product works and if you risk losing money. CFDs are complex instruments. 74% of retail client accounts lose money when trading CFDs with this investment provider. You can quickly lose your money through leverage. Make sure you understand how this product works and if you risk losing money.

Oil is one of the most volatile commodities that can be traded in the financial markets. Discover how to trade oil futures using our award-winning platform.

How To Trade Oil Futures

Oil futures are financial contracts in which a buyer and seller agree to trade a specified quantity of oil at a specified price at a future date. Crude oil futures give the buyer the obligation to buy the underlying market and the seller the obligation to sell on or before the expiration of the contract.

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The level at which the futures contract is currently trading is also the price at which the future trade will take place. For example, if oil futures are currently at $75, this is the level at which the asset will trade when the contract reaches maturity (or “settles”). A buyer of oil is ‘long’ the future, while a seller is ‘short’.

Oil futures trading is the buying and selling of crude oil futures. Traditionally, you would trade crude oil futures if you were an oil producer or used oil as an input to industry. Contracts remove the uncertainty of future prices, thereby reducing risk. You can also use oil futures to predict oil prices.

For example, if you think the price of Brent crude will rise above the current spot price of $130 per barrel, you would expect oil futures to trade above that – at $132.

If you decide to go long, you ‘buy’ oil futures. So if your guess is correct and the spot price moves to $140 (as per your estimate) at expiration, you will make a profit of $8 per barrel on contract settlement. If, contrary to your prediction, the spot price had fallen to $120 at expiration, you would have lost $12 per barrel.

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Futures are traded on exchanges that standardize the terms of each contract. Listed oil futures are settled either physically or by cash payment. With physical settlement, the original barrels of oil are delivered. In a cash settlement, the difference between the future price and the spot market price is paid to the respective party in the contract.

With us you don’t need to deliver physical barrels of oil. This is because you are trading oil futures prices exclusively using CFDs – which track the underlying market.

With us, there are no financing costs for futures positions. This means you trade oil futures if you are looking for a long-term position in the underlying market. However, remember that futures have a wider spread than spot (“cash”) positions.

CFDs are leveraged products, meaning you only need to make an initial deposit, known as margin, to open a position that gives you greater market exposure.

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When trading with leverage, remember that your profit or loss is calculated based on full position size, not just on margin, which means your profits and losses will be larger.

Before you trade, make sure you understand how leveraged products work and decide whether you can afford to lose your money. Take precautions by using our risk management tools.

You can go long or short when trading oil futures. You go long if you think the price of the underlying asset will rise and short if you think it will fall.

When trading futures through CFDs, your profit or loss is determined by the accuracy of your prediction and the overall magnitude of the market movement.

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Oil futures hedging allows you to manage your risk exposure. For example, if you own stock in a company that produces Brent crude oil and you think its value will drop, you can short oil futures. If your guesses are correct, the profits you make by shorting your position can offset some of your losses.

When trading oil futures, you can choose from two dominant markets: Brent crude and West Texas Intermediate (WTI), also known as US crude. Brent crude is produced in oil fields in the European North Sea, while WTI is extracted in North America.

Brent crude is used as a benchmark when trading oil contracts, futures and derivatives internationally, while WTI is primarily used as a benchmark in North America.

The price differences or ‘quality spread’ of oils is due to their different properties. Both oils are light and sweet, making them easy to refine and process by gasoline manufacturers.

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If you prefer not to close your position on or before the expiration date, you can adjust the settings in your account to allow it to roll over automatically.

By extending the contract expiration date, you postpone the delivery of the asset until the following month, and then avoid the costs and liabilities associated with settling a future contract. This is often the case when you don’t want to take delivery of physical assets like barrels of oil.

When trading CFDs you can set automatic rollover instructions by logging into your account, selecting ‘Rollovers’ in the ‘Settings’ tab and then following the instructions. After setting up rollovers in your account, you will receive a confirmation email.

With us you can trade CFDs on price movements in oil futures markets. CFDs are traded with the contract value already a specified amount per point ($) or a ‘tick’ in the price of the underlying asset. Please note that oil CFDs are quoted in US dollars.

Crude Oil Futures Trade Lower On Exchanges

With us you can trade oil futures through CFDs. You can use these derivatives to predict rising and falling prices on oil futures.

If you are new to oil futures trading, you can open a demo account to practice in a risk-free environment with $20,000 in virtual funds. Once you’re confident, you can open a live account – with no obligations to deposit or trade until you’re ready.

You have the flexibility to choose the oil futures markets you want to trade – Brent Crude, US Crude (WTI), Palm Oil, Heating Oil or London Gas Oil.

You can also choose not to close your position on or before the expiration date. This means your contract expiry date will automatically be moved to the next month.

Cme Micro Crude Oil Futures

To set up automatic rollover instructions when trading CFDs in your account, go to the ‘Settings’ tab, select ‘Rollovers’ and follow the instructions. You will receive a confirmation email once the rollovers have been successfully set up in your account.

When you are ready to take your position, click ‘Buy’ to go long or ‘Sell’ to go short. Next, set your position size. To manage your risk, select your limit and stop-loss levels on the deal ticket. There are many tools you can use, for example, simple, trailing and guaranteed stops.

A simple stop-loss is an instruction to close your position after reaching a favorable price below the current market price. Although this is a useful tool, if slippage occurs, your order may not be fulfilled at the quoted price.

A trailing stop is set to automatically adjust to market movements, meaning it follows your position. It locks your profit when the market moves in your favor and closes the position when it moves against you.

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A guaranteed stop is executed at exactly the specified price. This stop works like a base stop in that it always fills at the level you set, regardless of rapid price movements or gaps.

Once you are happy with your trade size and risk management orders, you can proceed to open your trade by clicking ‘Place Deal’. Once that’s done, you can track your location.

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Investing in CFDs involves significant risks of losses and the value of your investments may fluctuate. 74% of retail client accounts lose money when trading CFDs with this investment provider. CFDs are complex instruments and the risk of losing money quickly is high due to leverage. You should consider whether you understand how this product works and whether you can afford the risk of losing your money.

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CFD accounts offered by International Limited. International Limited is licensed by the Bermuda Monetary Authority to conduct investment and digital asset trading.

Provides fulfillment service only. The information on this site does not constitute (and should not be considered) investment advice or an investment recommendation or an offer or solicitation to deal in any financial instrument. assumes no responsibility for any use

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