Energy
Many of you came to psi-markets as Forex traders, but it’s always worth considering that the energy market is also full of opportunities. Energy markets are one of the most interesting and exciting markets in the world. Trading in energy involves buying and selling commodities such as crude oil, natural gas, fuel oil and gasoline. The prices of these commodities can fluctuate heavily, which is why they are very attractive to traders and speculators looking for good markets to trade.
We believe it makes more sense to trade in the most liquid energy markets. They include West Texas Intermediate crude, Brent crude, and the gasoline and natural gas markets. Products such as fuel oils and various forms of electricity are not as liquid and can be very erratic, which requires specialized knowledge. Stay with liquid markets and trade popular energy products.
Popular Energy Contracts
The most popular commodity contracts among traders are:
- West Texas Intermediate (WTI) Crude Oil
- Brent Crude Oil (Petroleum)
- Gasoline
- Natural gas
Forex traders almost always have experience judging price movements based on economic data, and energy products can also be scrutinized this way. One example is the seasonality of energy products. As summer approaches in the US, it’s common to see gas prices rise due to increased travel. Winter also brings seasonality, but this time, to natural gas. Since the northern part of the USA has a very harsh winter, its population needs large amounts of natural gas for heating, and prices follow American winter temperature patterns.
You will also see the influence of geopolitical movements on crude oil. For example, tensions in the Middle East could cause a sudden change in oil prices. Any conflict or threat of supply disruption will stimulate a rally. And after tensions or disruption are resolved, prices retreat.
It is also worth noting that crude oil markets are notoriously sensitive to the value of the US dollar. This happens because oil is priced in dollars. Therefore, when the dollar appreciates, it makes oil more expensive for other countries, which will have to buy more expensive dollars to then buy oil. This could cause a price drop. The reverse is also true, as the price of oil tends to rise when the US dollar is weaker.
Advantages of trading energy CFDs at psi-markets
You’ll find many ways to invest in the energy markets, including options, futures, ETFs, and energy bonds. You can even buy a real barrel of oil if you so desire. Each method comes with its own risk and can range from direct investments in oil to a price speculation or hedging strategy.
Most importantly, if you intend to speculate in oil, you will need an account with a broker and that is where psi-markets can help you. We offer speculation on crude oil CFDs, the convenience of which is highly appreciated by our traders.
Of course, you can also find a futures broker to trade oil futures, but this will be a much more expensive proposition. In the US, you would have to have more than $5,000 per contract to satisfy futures trading margin requirements. This would be the margin for a full lot, but in reality you would need much more to avoid a margin call if prices move against you.
Compare this cost with CFD trading offered by psi-markets, where you will be able to trade with much smaller amounts. You will have to meet much lower margin requirements and will also have lower value ticks on each contract, which is an advantage for average investors who trade crude oil.
CFD trading is a hedging idea, and since their value moves in lockstep with the underlying futures market, the difference between the two (apart from margin requirements or tick value) is basically negligible, and CFD trading will not have its performance affected when compared to futures.
psi-markets can help you with your training in the oil markets, with their fundamental factors and with analysis of price trends. Open an account to experience the thrill of energy CFD trading.