Now a days Trading of Oil has become popular due to sudden rise and fall of oil prices. Trading oil is exactly the same as Forex , stocks etc., the advantage of oil trading is that we can book profits from falling prices just the same as rising prices, by selling rather than buying. The “leverage” which allows us to buy huge quantities with just a small deposit, so we can gain profits from a small move up or down in price however this is potentially risky which we can get rid of risks by putting automatic “stop loss” options during the trade. The risk will be lower because we put in a stop of 90 pips (a $0.90 move on the price of oil). MetaTrader shows the daily 'spot price' for oil and both this spot price and the oil 'futures price' are available depending on which broker you use. The futures price is simply an estimated price for oil for delivery at a set date in the near future. It really makes no difference to our trading.
Here is how a typical trade works. We see that the quoted price is 81.50 - 81.56 so this means that we can buy at 81.56 oil and sell at 81.50 - the difference in prices being the broker's profit. We have a sell signal on our chart, so we sell 0.1 contracts or $1 (or £1) a pip. Now, a 'pip' is the smallest movement, which in this case is 0.01 or a one cent move. At the same time, we put in a stop loss at 82.40 (90 pips up in the 'wrong' direction because we are selling and want the price to go down) and a take profit of 80.00 (150 pips in the hoped-for direction). Then, we simply wait anything from ten minutes to five hours, on average.
Trade Oil
