How To Trade Oil Futures For Absolute Beginners
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Many people, especially beginners wonder how to trade oil futures? The basics of trading oil are simple and similar to buying and selling stocks online, but the size of individual contract is different. One contract of crude oil indicates 1,000 barrels of crude oil. The trading hours for light sweet crude oil is 9:00 am to 2:30 pm eastern time from Monday to Friday. Crude oil is reflected as CL in the trading index. Since the size of a contract is 1,000 barrels of crude oil, the future contract of crude oil increases or decreases by 1,000 dollars, if the prices of crude oil moves upwards or downwards by one dollar. A trader can earn money by going long as well as by going short with oil trading. In oil day trading, going long means buying first and selling later while going short means selling first and buying later. Following are some of the basics of trading oil futures for beginner traders. First of all, open a trading account with a broker. It is very important to choose the broker who has a good track record with years of experience in oil trading. Start with a practice account to gain experience in trading oil futures before you start trading with real money. Now do some research and evaluation. Keep yourself educated about the weekly demand and supply position of oil by reading reports published by the American Petroleum Institute. Read the charts and patterns, and determine existing demand and supply position. Collect information about seasonal fluctuations, weather changes that may affect the production and transportation of oil, and learn about political conditions in oil producing countries. Besides this, read the statements of OPEC which will help you to get a clearer picture about movements in oil prices in a short period. After gathering this information, it's time now to do some technical analysis. This includes keeping track of increase and decrease in trading volume, monitoring candlestick charts, evaluating moving average price to find out whether short terms trends are diverging or converging with Moving average convergence diversion (MACD). In addition to this, extrapolate Fibonacci numbers and check suitable charts to get a clear picture about price movements in oil. Always take your trading position by confirming with MACD and moving average price as they are strong indicators of price movements. Moreover, they are simple and easy to understand. Volume means liquidity; hence, it is always advisable to trade oil when the volume of trading is high in the market. This gives an opportunity to earn short-term profits, but it gives rise to equal chances of risks. This is the main reason why it is always recommended to trade with a practice account for at least a month before starting real trading. The price movements and statistics in a practice account are real-time; hence, you will be able to gain experience with real-time market data. Develop a simple trading strategy based on your experience and stick to it. If you find your trading strategy ineffective, evaluate your strategy and make necessary changes. After gaining sufficient experience, you can start real trading. Start with minimum deposit in order to limit the amount of loss. The key to succeed in oil trading depends upon the broker you choose, the trading strategy, current news that affects oil prices, your patience and dedication. If you dedicate sufficient time and effort, and trade in a disciplined manner, you will definitely earn money without wondering, "How to trade oil futures?" FREE Trading System!