OIL TRADING BROKERS

HOW TO TRADE OIL ON FOREX?

In most cases, Forex oil trading is directly related to the change in quotations of currency pairs. Therefore, not only experienced traders, but also a newcomer to the exchange will be able to correctly predict changes in the Brent and WTI prices. To do this, you simply need to take into account the full range of existing trading factors on Forex. It should be noted that one of the main features of oil trading is a priority importance of fundamental analysis.

BEST OIL TRADING BROKERS

Everyone knows that Forex oil trading is a great way to hedge currency positions with Brent and WTI oil trades. In addition, oil charts for Brent and WTI will become an additional source of important information for the correlation analysis in trading different currency pairs on the Forex market. In this case, technical analysis plays a secondary role when you trade oil on Forex. But how to trade oil without it?

 Rating from TopBrokers.com includes many proven brokers, for whom Forex oil trading is the prerogative. They provide their clients with the opportunity to work on the market under different terms. With so many different options of oil trading, you will surely be able to choose the most suitable company for trading. Study every offer on the exchange and learn to trade oil on Forex. A responsible approach to the choice will allow you to find a company with which Forex oil trading is the most profitable for you.

Oil Trading Explained

Oil is a volatile commodity, and the two most traded assets are West Texas Intermediate (WTI) and North Sea Brent, both considered light sweet crude as their sulfur content is below 0.50%. Brent crude remains the global standard while WTI is more US-specific. Brent usually trades above WTI in terms of price, known as the WTI/Brent spread.

The oil trading basics are the same as trading Forex, equities, or any other asset class. An online broker offers the most convenient option to trade oil. The price of oil is volatile and influenced by geopolitical events, the economy, and the weather. Therefore, oil traders must monitor events across the pipeline. CFDs remain the best oil trading instrument offered by the best brokers for trading crude oil. It grants traders exposure to price action without purchasing the underlying asset. Since the introduction of CFDs, they became the primary trading tool for hedge funds and retail traders alike.

US and Canadian regulators do not allow CFD trading and deploy an outdated regulatory framework. Therefore, traders can transact in options, which have an expiry date after which they become worthless or futures, legally binding contracts to deliver oil. It remains one of the most popular trading assets, and its liquidity results in low spreads, ideal for scalpers and high-frequency traders. OPEC lost control of the oil market over the past decade. Russia and the US yield significant influence over price action, sometimes countering Saudi Arabian policies, the primary oil producer within OPEC, and the top global oil exporter.

Oil Trading Regulations

Traders should ensure that they trade with a regulated broker but must also consider the regulator. The ESMA in the EU, the SEC in the US, and the IIROC in Canada have strict and counter-productive rules. Despite the regulatory climate, the most significant frauds occurred in the US and Cyprus. Regulators including the ASIC (Australia), the FSCA (South Africa), the BVIFSA (British Virgin Islands), the FSC (Seychelles), the IFSC (Belize), the DFSA (Dubai), and the CIMA (Cayman Islands) remain among the most competitive and trustworthy ones, but none allow US-based traders.

Trading Crude Oil in the US

Since US traders cannot benefit from CFD trading due to SEC regulations, their best product is an oil exchange-traded fund (ETF). Futures contracts on US crude oil and UK Brent crude traded on the NYMEX, where one contract equals 1,000 barrels, is another option for more significant portfolios. The e-mini crude oil futures contract written by the CME Group offers smaller portfolios an improved asset and consists of 500 barrels of oil.

How to Choose a Crude Oil Trading Broker

Traders should look for brokers allowing oil trading from a secure and competitive trading environment. Tight spreads, low commissions, high leverage, and a volume-based rebate program ensure traders earn more per oil trade. The trading platform should support automated trading solutions and third-party upgrades to create a competitive edge.

Crude Oil Trading Platforms

The MT4 trading platform and cTrader remain two of the best choices. The former is the most versatile one, and the latter the best out-of-the-box solution. The best brokers for trading oil futures will offer one or both. Several brokers also provide proprietary trading platforms as an alternative, but most of them support manual trading only, which suffices for new traders but is not enough for advanced ones.

Oil Trading Account Types

Oil is one of the most volatile assets, and trading from the appropriate account type allows traders to achieve improved trading results. New traders should consider a micro account, ideal for learning how to trade with deposits under $1,000. It precedes the mini and standard ones, best suited for portfolios below and above $10,000, respectively. Some provide VIP accounts that grant special non-trading-related bonuses. Not all brokers maintain a multi-tier account structure. Therefore, traders should ensure that the minimum transaction size is 0.01 lots.

Commissions & Spreads

Commissions and spreads are the primary direct trading costs. They will have the most visible impact on your trading strategy. Active traders should seek an ECN account with no mark-ups on spreads and competitive commissions no higher than $6.00 per round lot. Oil spreads should range between 0.2 and 0.3 points. A volume-based rebate program will lower final trading costs, and I highly recommend a broker that offers one.

What Are Margins & Leverage?

Margin refers to a percentage amount a trader needs to pay to take a position. For example, if a broker has a 5% margin requirement, a $500 position requires $25 capital. Leverage represents a ratio that defines the margin requirement. Competitive brokers offer 1:500, meaning a $500 trade requires $1 in margin capital. Risk management remains critical to margin and leverage trading.

FAQs

What does an oil broker do?

An oil broker offers trading instruments for oil. Depending on what is available, an oil broker also facilitates the storage and delivery of physical goods, i.e., the barrels of oil purchased.

How much do oil brokers make?

It depends on various factors – some out of their control – making an estimate rather challenging. The majority average somewhere between $30,000 to $70,000 in commissions, while top brokers can easily crack seven figures.

How do you buy oil trades?

An online broker remains the most convenient way to buy oil trades. There are countless oil trading brokers and Forex oil trading brokers catering to the rise in demand.

Can you make money trading oil?

Yes, you can make money trading oil. The same as with all other asset classes applies. Education, knowledge, patience, discipline, and capital remain the primary ingredients to succeed as a trader.