Information about the cost of oil is regularly heard from the media, and even for a person who is far from investing, it is difficult to ignore it. What about the traders – many of them specifically look at this asset as one of the main ones on the market.
The matter is that oil is highly volatile: it falls or rises sharply, and one can make a profit with the right approach. Let us tell you how to trade crude oil futures to profit from changes in crude oil futures prices.
How is oil crude futures trading organized?
The greatest interest for investors is oil futures trading — options are considered less effective tools. A futures contract is an agreement under which both the seller and the buyer deposit a surety, which makes it possible to strike a deal at a specified time in the future and on specified terms. Each futures contract has a specification – a document specifying all the parameters of the instrument.
The main peculiarity of crude oil futures Brent trading is that these are settlement instruments. No physical delivery of oil is carried out using them. The profit is received due to the transfer of the difference between the opening and closing price.
If during the day trading crude oil futures the price of the asset rose, then the amount of its rise will be transferred from the seller’s account to the buyer’s account, and vice versa. Because these contracts are fixed-term, they have a start date, a last circulation date, and an execution date.
The term of oil contracts is one year, and they are executed monthly. The futures of the closest execution are considered the most liquid.
Where to trade oil futures?
To work with oil contracts one needs a trading terminal, a special software, which allows making transactions in the real time mode.
To trade crude oil futures effectively, before using e-mini crude oil futures quotes, it is first necessary to set up the terminal. To do so, add the contracts of interest to the “Current Trading” table and then display the “% Change”, “Last Transaction Price” and “Money Turnover” columns.
Arrange in a convenient way the Quotations stack, as well as the chart of the futures you are interested in. It is advisable to connect the “Current trading” table, the price chart and the market depth of quotations with each other, so that when you click on the interesting futures in the table, the chart and the market depth will change automatically.
Below you can place tables “Limitations on client accounts” and “Positions on client accounts”, reflecting the existing positions in futures and income from trading, and to the right of them – attach tables of deals, orders and stop-orders.
Now you know how to properly trade crude oil futures. Want to practice? You can do so without the risk of losing real money by opening a demo account with one of the many companies. That way you will learn how to analyze the crude oil futures historical chart and make the right decisions.