Top crude oil trading strategies for beginners

What is crude oil trading?

Crude oil is one of the popular and widely traded commodities across the world. Also, the fluctuations in crude price directly impact other commodities prices, such as natural gas and gasoline. Moreover, the oil's ripple effect also affects other popular markets, including currencies, bonds, and stocks. The world is slowing, shifting toward renewable sources of energy. Despite this fact, the energy sector and especially crude, has not lost its importance over the years. So, crude is one of the best commodities to trade in the financial market because its market remains incredibly active and is well known worldwide.

Some tips to earn profit from crude oil trading.

1) Understand what move the prices in crude oil trading

If you are keen investors and looking forward to trading cured oil, you should know the importance of supply and demand and how they impact prices. A nation's ability to buy higher quantity and global economic output affect both oil production and demand. For example, if the supply is high, its prices will go down; thus, shutting down the productions.

2) Differentiate between different types of oils

It is vital to understand the difference between West Texas Instrument crude (or WTI) and Brent crude. A minor difference between both former is produced in the United States Permian Basin and several other local places; on the other hand, the latter is produced in the North Atlantic. Both these varieties have different API gravity and sulfur content. In this, the lower oil is generally known as light sweet crude oil.

3) Understanding the crowd

Hedgers and seasoned investors control the energy market. Industry players take a trading position to compensate for physical exposure. Moreover, the hedge funds meditate on the short and long-term direction. The role and influence of retail traders are less in this arena. They impact sectors like stocks and precious metals.

Retail traders or firms impact surges when oil drifts sharply. Thus, they make money from small market players who participate in the market by looking at the front-page headlines.

4) Pick the right broker for crude oil trading

Choosing the right broker is necessary as it is the link between the financial market and trader. The weak link will affect trade inversely. The financial market contains many fake firms which aim at snatching your hard-earned money. So, always go with a well-regulated broker which offers technical tools to determine entry and exit points. T1markets stands on all expectations.

5) Purchase and hold trading strategy

It is the best and most widely employed trading strategy in oil trading. Investors monitor and consider all factors such as supply and demand and then decide to sell or buy. If a thing goes as per anticipation, traders close their position to secure profit. However, if the market goes against them, they may decide to hold the security.

6) Technical Analysis Trading Strategy

Traders make Investment decisions related to crude oil through technical tools such as bar charts, volume and bar charts. These instruments help investors to anticipate the future price of crude oil and shift in its value. Moreover, they also help in determining the precise exit and entry points for buying and selling.

How to start with crude oil trading

For trading oil, you need to open an online brokerage account with the broker. It hardly takes fives minutes in the process. So, here are some steps which you need to follow:

1) Visit the site and register yourself by giving personal details such as name, country and email id.

2) Enter the OTP, and the website will direct you to the documentation session. Here, you are required to upload some mandatory documents, including identity proof, address proof, financial and bank statements.

3) Choose the type of trading account, market and commodity you wish to trade.

4) Deposit the minimum amount to open a trade. For T1markets, this amount is as low as $250. Trading is commission-free with the broker.

5) You can now start trading.

The Bottom Line

The price of crude oil is highly volatile. Apart from supply and demand, several other factors influence the price, such as geopotential tensions etc. Thus, it is important to formulate a strong trading strategy before trading in crude oil. You can start with the demo trading account if you have any kind of fear or doubt about your strategy.

Frequently asked questions

1) What is crude oil trading?

Crude oil is one of the popular and widely traded commodities across the world. Also, the fluctuations in crude price directly impact other commodities prices, such as natural gas and gasoline.

2) Where can I trade crude oil?

You can trade crude oil with T1masrkets. It is a leading platform offering all top analytical tools and platforms for trading.