About Crude Oil Trading
Oil Trading is a term that is commonly used by oil investors and crude oil traders to describe trading activity in the crude oil market that is carried out by traders, investors & speculators.
In oil trading a trader can buy or sell oil. A trader will buy oil if they think the value of the oil instrument is likely to appreciate in the future. A Oil Trader will sell oil if they think the value of the oil instrument is likely to depreciate in the future.
The Oil Trading Market is an over the counter market which means trading is carried out through a network of the big international banks; this oil trading network is commonly referred to as the interbank network. This interbank oil trading network consists of banks and oil brokers which are in different locations. These interbank network is responsible for providing the oil prices at any particular time to the traders and other oil market participants who want to buy or sell oil. In oil trading the crude oil price is constantly changing and this crude oil price is denoted by what is known as a Oil Trading Quote. In Oil Trading the Oil Trading Price is displayed as a Oil Trading Quote. This oil trading quote is constantly changing and the interbank network will update automatically the current oil trading quote and crude oil traders can then trade the crude oil at the current crude oil price.
Oil Trading Quotes
Trading oil prices of oil trading instruments is displayed using Oil Trading Quotes. This is the crude oil price at which any oil trader wanting to trade oil will trade at.
Because oil prices are constantly changing it means that crude oil traders can take advantage of these crude oil price movements to make profits by trading these crude oil price movements. The crude oil price of any oil instrument will keep moving because of demand supply. This is because there are many participants trading oil instrument in the open oil market and therefore this means that the crude oil price quotes will get determined by the current market forces. These market forces may be determined by factors such as an increase in demand for oil.
Oil Trading Pips
In oil trading the crude oil price moves are measured in points commonly known as Pips in the crude oil market. The pip is used to calculate the profit or loss that a Oil Trader makes in a particular trade. For example if a trader makes a trade which moves 50 pips in his direction, then the profit of the trader will be calculated as 50 oil trading pips. Pip in oil trading is represented as the second last decimal point in the Oil Trading Quote and it is made up of pipettes - pipettes are fractions of a Oil Trading Pip.
Oil Trading Lots
In crude oil trading - oil is traded in units known as oil lots or oil trading contracts.
Oil Trading Leverage
Because not many crude oil traders can afford to trade large units of oil trading contracts, there is oil trading leverage in oil trading which means that crude oil traders can borrow money and use the borrowed money to make trades with. For example oil leverage of 100:1 means that a trader with capital of $10,000 can borrow up to 100 times using the 100:1 leverage option and therefore after borrowing using this oil trading leverage the trader will have a total of $10,000 multiplied by 100, which means the trader will have a total of $1,000,000. This oil leverage is what makes Oil Trading accessible to retail oil traders because retail crude oil traders can begin with little capital of their own and use oil trading leverage to borrow the rest of the money required for trading. Money that the trader deposits is referred to as a oil trader’s margin and a trader can continue borrowing money using this oil leverage option as long as they have the required oil trading margin in their crude oil trading account. This is why oil traders must have the required oil trading account balance in their crude oil account to open the trades they want to.
