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It’s not easy to know the importance of petroleum. It is an advanced trading option for modern traders. No material provides more energy than the cost of an extraction per unit. Unlimited and proven, crude oil will be the most famous energy source for our planet in the future.
According to the International Energy Agency, projecting 2020, the total consumption was 91.9 million barrels every day, crude oil trades in a genuine market with many amazing tools and solid vehicles for oil speculation.
Another way to think of oil prices is trading in crude oil futures.
The added regularity and frequency of oil contracts make it simple for the investors to identify and predict trends in the ultimate price of oil.
There are infinite things that determine the final price of oil, but our brains can consider only the most possible ones, like the current price of oil.
You have to develop patience and become fearless to trade in oil futures.
How does Oil futures work?
Oil futures are easy on paper. They sell the risk to others who are ready to buy with the hope of making money. The buyers and sellers will form a price that gold, oil, or soybeans will not trade on the same day. Literally, no one knows that the price will show up after nine months from now. Many players still believe that they can.
For example, suppose that Commodity A, which is selling at $20, will be available for $25 in a contract that will be due next February. A trader who believes that the cost will go high, in reality, shoots past that, say to $35, by said time can buy the $25 contract. If the prediction is accurate, they can then buy B at $25 and sell it immediately with a $10 profit. But should A end up falling down to $25, their contract is useless.
In November 2020, the upcoming month’s futures contracts—December —are selling for $30.25. The following month—January— is at $30.53; February is $40.88; March is $30.22; and after two years, oil prices (or at least) as predicted by the level of futures contracts) are predicted to hit $33.46 a barrel. Nor does the bullish trend stop there. After the two-year mark, instead of monthly settlement, the oil futures will settle annually or twice a year. The latest available contract will sell for $40.34.
To trade in oil futures, you will require two often different characteristics: bravery and patience. Therefore you will need a huge bank balance to get started. Oil futures contracts are not always measured in single barrels but in thousands of barrels. The price of your liquid asset will fluctuate without any doubt. That means it might require plenty of time to realize the profit or know if you have made the wrong decision. The beginners must have to be conscious while trading in oil futures.
The futures trend will move in only one direction for one thing. Every change makes a positive impact. It does not matter how gradual the change is.
Certainly, the oil will consistently go high for the upcoming eight years without any downfall.
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Source URL : https://go.commoditiesuniversity.com/day-trading-futures-made-easy
