Oil is one of the most sought-after assets in the world. It’s used by nearly every modern economy and offers the most energy per unit of extraction cost. As a result, it is a highly liquid market with many different vehicles for investing or speculating on price movements. One of those vehicles is through trading futures contracts.URL :theinvestorscentre.co.uk

Trading oil futures entails entering into an agreement to buy or sell a certain quantity of crude on a specific day in the future for a predetermined price. The contract size varies by contract type, but the standard West Texas Intermediate (WTI) oil futures contract (ticker symbol: /CL) is 1000 barrels. Traders can also trade the E-Mini WTI oil futures contract (/QM) or the Micro WTI oil futures contract (/MCL). Traders may also access crude oil through exchange-traded funds or ETNs, but futures offer greater flexibility and transparency.

Exploring the Future of Oil Trading in a Changing Market

There are two basic positions when trading oil, long and short. A long position is when you buy a contract, hoping to benefit should the price rise. A short position is the opposite, where you sell a contract and hope to profit should the price decrease. The oil market can be very choppy, but learning to recognize patterns and develop a strategy that meets your investment goals can help increase your potential profitability.

As with all futures markets, it is important to fully understand the underlying risk before deciding to invest. It is recommended that traders only risk a small percentage of their overall portfolio on these high-risk investments.