Just like forex brokers, there are crude oil brokers that help you to observe the changes in oil prices and trade them. There are multiple oil brokers that can help one in oil trading. In this article, we will learn the basics of crude oil trading and tips for choosing a good oil broker.
Who Are Oil Brokers?
Oil Brokers are the intermediates for executing buying and selling of oils online. Like forex trading, in oil trading, the trading is done on the fluctuating prices of the oil. Various factors influence the cost of crude oil.The oil prices typically depends on 3 major factors:
- Economic Conditions
- Geopolitical Events
Oil brokers provide online oil trading services by closely observing the oil prices and the factors that influence them.
Insight Of Oil Brokers
There are rules and regulations for oil trading, and the regulatory bodies are from oil exporters: South Arabia, America, and Canada. In America, the SEC regulates oil trading, IIROC in Canada, and ESMA is for the EU. With all regulatory bodies and trading rules, there are less fraud cases in oil trading. Always, choose a regulated oil broker for oil trading that follows all rules, and is registered.
You can open an account for oil trading in any of the following three accounts:
- Micro Account: This is good for new traders. It allows minimum trading of less than $1000.
- Mini Account: This account allows a deposit of less than $10,000.
- Standard Account: it is a premium account with trading deposits of more than $10,000.
Oil trading mostly takes place in dollars. Some oil brokers also provide VIP trading accounts with additional benefits while other oil brokers deal only with a single trading account.
Oil trading uses two terminologies: Future and spot contracts for trading. The spot price is the current market price at which a particular asset, such as a currency or commodity, can be bought or sold for immediate delivery, while the futures price is the agreed-upon price at which the asset will be bought or sold at a later date.
Tips To Choose Oil Trader
Oil trading has fewer chances of loss, but choosing the right and genuine oil broker is a challenge for traders. Here are some handpicked tips for choosing the right broker for you.
- Choose a highly active and regulated broker.
- Check the authenticity of the oil broker and verify it with a proven history of records
- Check how the oil brokers operate. Do not forget to check trading conditions such as spreads and leverage.
- The commission of the oil broker is the turning point of any trading. Compare the trading commission with other charges of the oil broker as well other competitive brokers in the market.
- Thoroughly ask and check oil brokers or inspect if they have any hidden charges or not
Oil is a volatile asset and offers plenty of earning opportunities. Before selecting an oil broker, traders must focus on the oil commissions, spreads, leverage, and other charges.