Oil Market Tutorial
Learning to trade the crude oil market will be much easier for beginner traders that starts by learning oil trading basics as they will have the basic ideas and concepts that are required to make it easy to understand what is crude oil trading and how to carry out crude oil trading.
What is Crude Oil Trading?
Now with the advancement in technology & the growth of the internet crude oil trading and the coming up of retail brokers oil trading has now become accessible to retail traders and anyone with a computer that is connected to the internet can start trading oil. Minimum starting amount required to begin trading is $100 dollars making oil trading affordable to many retail traders and investors.
The retail investor can now get access to the online oil market through these retail crude oil brokers. All a trader requires is to open an account with a broker and the trader can then trade with their crude oil broker from anywhere in the world.
The retail oil brokers also provide traders with the capital required to trade in the crude oil market using crude oil trading leverage. Oil trading is traded in standard oil lots or one standard oil trading contract. Because many traders cannot afford this, brokers provide capital to traders and traders can borrow this capital from their oil brokers and trade with it using crude oil trading leverage. For example a broker will provide oil leverage of 100:1 meaning that a retail trader can borrow up to 100 times of the capital they have. Therefore, if a trader has capital of $1,000 dollars in their account using oil trading leverage 100:1, they can borrow up to 100 times their capital, this will be $1,000 multiplied by 100, which is equal to $100,000 dollars which the trader will now control and the trader can trade with this amount in the crude oil market. This means that a trader with only $1,000 dollars can now trade with $100,000 leveraged amount in Oil Trading after using oil leverage of 100:1 from their crude oil broker.
Oil Leverage which means that a trader has access to borrowed capital & can trade with this borrowed capital provided by their oil broker is what makes oil trading accessible to may retail crude oil traders. This oil leverage is what has contributed to the growth and popularity of oil trading. In oil trading 95% of all trading transactions is carried out by retail crude oil traders.
Oil Trading Market Moves
In oil trading, oil prices are always moving up or down and it is this movement that traders want to trade in order to try and make a profit from these crude oil price moves. The daily crude oil price fluctuation is very small and mostly these moves are less than 1 % in value. This is why oil brokers provide crude oil leverage and why most traders use oil trading leverage so that they can multiply the profits from these market moves. Oil Trading is traded in big lots of many units so as to increase the profits per transaction - However, this can also increase losses as well if the trades go against a trader's position.
