18/ 1 / 2013 - January

4 tips for all the oil traders.

Lately trading oil has been quite a ride. Turbulence of the price is something that we are probably going to tell our grandkids when they are going to ask us about the most horrific times. Well, maybe not, but it is still pretty horrible at this point.

I, personally can’t even make myself enjoy the recent gains as I am constantly waiting for the new falls. And I can’t do anything with it. Well, we still have to wait for the better times and look into the possibilities to earn while oil trading.

So, want to know how to earn with oil trading? Stick with us! Here are the main point on how to be more successful when trading oil:

 

1. Know WHAT moves oil price.

2. Know WHO moves oil price.

3. Choose between the two.

4. Do not discard long term charts.

 

Oil prices 984856

1. Know WHAT moves oil price.

Every asset is moved by something. And oil is just the same. Oil moves mostly due to the news and information about demand and supply. Those two in their turn are mostly influenced by the output numbers. The numbers which are highly manipulated and speculated at the moment.

When the market is oversupplied, the demand falls and traders tend to sell the crude and vice versa - when the markets are undersupplied – traders then tend to buy oil due to high demand and as a result climbing per-barrel prices.

These and other points can play pivotal role in the formation of oil price and its movements. And we need to know and look out for every single one of them.

 

crude oil 650 650x400 71471248828

2. Know WHO moves oil price.

This is not the stock of forex market. This is oil market. And the price here is formed by the hedges and big companies. We as traders and investors are just along for the ride. And we do not need to think that our actions move the price. We are just a small fracture of the market. The price here is shaped by the big birds, and not by us after all.

Oh, how sad it is to feel so insignificant. Right? Well, we can actually benefit from this fact. We do not have to lose as much money as those big funds if we can track the possible future price movements.

When we know who has all the important cards it is easier to foresee the fall and get rid of the asset is that is needed

 

OIL PRICES 997915

3. Choose between the two.

Ok, we all know that there are two major crudes out there. It is Brent and WTI oils. And we need to choose between the two as both of them have different dynamics and can behave differently in the same situations. Choosing between the two of them is actually one of the first steps that we have to make when trading oil.

Why do we need to choose? Well, different dynamics and different political situation in the countries that hold the two crudes are going to make it much harder to follow both of them simultaneously. Eventually you are going to lose focus. Which is bad enough by itself, but to see them performing different and make wrong actions is infinitely worse.  

Just make the choice, read up, decide who you want to support and head into trading.

 

oil

4. Do not discard long term charts.

… even if you are shorting. Not once have we already learned that no matter the asset and your intentions with it, you need to look carefully on the long-term chart and analyze it. What if in the future you get in the same situation as the asset has already seen before? Wee, then you are already going to know the outcome.

Simply speaking long-term chart is going to make you be more informed and have advantage before everyone else in the field.

As you can see we haven’t gone deep in the professional discussions of the oil trading, Well, I just thought that I am going to leave your professional decisions up to you. After all, you need to have a thrill in your trades, don’t you?

 

Are you trading oil at the moment? How is it going? Be sure to tell me in the comments!

 

 

 

Add comment