FXTM information and reviews
FXTM
93%
OctaFX information and reviews
OctaFX
92%
XM information and reviews
XM
91%
FXCC information and reviews
FXCC
90%
Libertex information and reviews
Libertex
89%
FxPro information and reviews
FxPro
88%

Trading Oil CFDs with LegacyFX


28 October 2021

CFD refers to a deal made between a buyer and a seller, not to trade the actual product but a deal on the difference in the price of the product (CDF = Contract For Difference). Trading CFDs on commodities such as crude oil requires investors to speculate about the up and down movements in price of the trading instrument. In contrast to buying oil, CFDs on commodities allows the trader not actually purchasing the underlying asset and not taking delivery of it. What a trade is doing is taking either a short or a long position, depending on whether he or she thinks the market will go up or down.

Means, the trader will take a short position if he thinks the price will decrease, or a long position if he thinks the price will increase. If the speculation was correct – a profit is made. This structure allows the traders to benefit from greater flexibility. It gives him better chances to profit from the market movement.

Frequently Traded Commodity

Oil is actually the most traded commodity! Another commonly traded commodities are precious metals: gold, silver and copper. Oil considered to be an energy beside natural gas. Another group of commodities called “soft commodities” include cocoa, coffee, cannabis and sugar.

How to start trading CFD

First to thing to do is research – find out about the available commodities and their volume of trade. Your choice will also be made based on the price of the unit of the commodity. After you have established on which commodity you want to trade, you will have to decide the size of your preferred deal. This is determined by the leverage which allows you to trade with a bigger volume than your initial deposit. Checking predictions and analysis will help you to determine whether to take long or short position. You want to open a long position if you believe that the price of the oil will rise and a short position if you believe it will fall.

Trading CFDs on Oil

As we know, crude oil, or petroleum, is a fossil fuel formed as a result of the activities of bacteria on the remains of plants and algae. As this continues for millions of years with heat and density, these components transform into carbon. Thus, we have a mixture of hydrocarbons and cyclo-paraffin deposited in deep rock strata or scarcely near the earth's surface. To successfully trade CFDs on oil, you must understand factors influencing the demands for oil.

The transportation sector is the largest consumer of oil and indicators show that things are not likely to change until 2040. This is followed by the construction industry consisting of cement, glass, iron, and steel. Sectorial industry and agriculture are the third and fourth consumers. Anyone trading CFDs on oil should also take note of the factors influencing the price movement. These include:

A word about the Saudi Aramco IPO

When the world’s largest oil producer goes public, it will definitely create a new dynamic for all the players in the oil market. In today's unstable economy, it may sometimes be hard to feel confident about making investment decisions. Therefore, as mentioned above, investing in CFDs can be a great idea. They provide you with greater liquidity and easier implementation ensuring that you cover all possible market movements. By trading on the CFDs, you can profit from any movement, whether up or down, in Saudi Aramco’s stock price. Another benefit of trading Saudi Aramco’s IPO with CFDs is leverage. Trading with leverage allows you to open considerably larger positions in a trade while depositing small initial fund.

#source

Share:


Related

Step up your investments in the blockchain market with MaxiWyse
Step up your investments in the blockchain market with MaxiWyse

Enter the blockchain markets without owning any digital currency. Invest in Bitcoin, Ethereum, Cardano, FTT, Solana, and many more...

18 May 2022

Get access to 2000+ trading instruments with Demaxis
Get access to 2000+ trading instruments with Demaxis

Demaxis results-driven team of experts goes the extra mile to create more trading opportunities and build distinctive value for our clients. We’re committed to putting our clients first...

18 May 2022

Olymp Trade's New Trading Signals
Olymp Trade's New Trading Signals

Trading Signals are instrument-specific real-time trading advice available on Fixed Time Trades (FTT) and Forex trades (FX) trading modes of the Olymp Trade platform. Read the article to see how Olymp Trade...

17 May 2022

Just2Trade and delta.theta announce strategic partnership
Just2Trade and delta.theta announce strategic partnership

Just2Trade and DeltaTheta announce a strategic partnership, launching the new "regulated DEX" service. This product lets Just2Trade's clients trade options on cryptocurrency...

17 May 2022

Cross-asset trading in global markets with Finaguide
Cross-asset trading in global markets with Finaguide

Diversify your market exposure with currencies, commodities, futures, and digital assets safely and securely through our cross-asset trading terminal. Our competitive trading conditions...

17 May 2022

Navigating the new normal with Libertex
Navigating the new normal with Libertex

If the post-pandemic age has been defined by anything, it has to be the massive surge in activity across the financial markets. The numbers of ordinary people getting...

16 May 2022


Editors' Picks

HFM information and reviews
HFM
87%
IronFX information and reviews
IronFX
86%
FXCM information and reviews
FXCM
85%
LegacyFX information and reviews
LegacyFX
83%
NordFX information and reviews
NordFX
82%
FP Markets information and reviews
FP Markets
81%

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.