Oil today, like currency pairs, is traded on Forex. Often, only the terms of trade differ, in particular, another leverage is valid. Oil is traded on so-called CFDs, which are designated as CFDs. Their feature is the presence of expiration, i.e. a specific date on which the transaction will be closed at the market price in case the open order was not closed earlier. After the automatic closing of the contract, it is possible to open a new order also with a certain expiration date, but already at a new market price.
What you need to know about oil trading on Forex?
Today, two major brands of oil are trading on Forex: the most popular brand is Brent and the US oil is USoii. Trading begins on Monday at 01:00 GMT and ends on Friday at 22:00. In trading sessions there is a break between 23:00 and 01:00 the next day. The formation of the price of oil is influenced by the same fundamental factors that influence the value of currency pairs. Therefore, fundamental analysis differs little from that for currencies, and it should be borne in mind that both states, large corporations, and consumers (including you and me, because we use gasoline to refuel our cars) take part in forming the cost of various types of oil. Speculative trading has little effect on the price; rather, on the contrary, traders adjust to the price, trying to capitalize on fluctuations in the cost of a barrel.
The advantages of oil trading
Compared with speculative currency transactions, oil trading on Forex has the following features: – more reliable, because it uses a different leverage, and the price does not fluctuate in such wide limits; – fluctuations in the cost of oil are more predictable compared to currencies; – oil does not depreciate and does not fall too sharply, because it does not depend on the economy of one state.
The ability to trade oil on Forex opens up new opportunities for the trader, helps to ensure stable profitability when using proven trading systems and minimal risks.
At the same time, it’s not worth thinking that oil trading is extremely simple and doesn’t require detailed market analysis, because without the latter, you will rather lose on contracts for differences on oil, because using leverage does increase risks compared to direct trading on contracts oil.