You don’t have to invest in a well to trade and potentially make profits from oil prices. Instead, there are several ways to gain exposure to this commodity using CFDs (contracts for difference), oil-linked shares and funds. The key is to choose a strategy that fits your preferred approach, risk tolerance and investment time horizon.
How to trade oil online you’ve chosen a trading strategy, you can start trading. To do so, you’ll need to select the market or instrument you want to trade – for example, crude oil (Brent or WTI) – on the platform. You can then use order types, such as a market or limit order, and set stop-loss and take-profit levels to help manage your potential risks and returns.
The price of oil is highly correlated to other markets, as it’s a crucial raw material that’s used in a wide range of industries. For example, the strength of the US dollar can have a direct impact on the price of oil, as it’s often traded in USD. The same applies to geopolitics, as political instability in key oil-producing countries can lead to shortages and increase prices.
Best Forex Brokers in the UK: A Complete 2024 Guide
Traders can also trade oil options online, which are similar to futures contracts in that they don’t require ownership or delivery of actual barrels. However, because they’re leveraged products, your potential profits and losses can be amplified. To trade options, you’ll need to find a broker that offers this type of product and register with them.