How to buy oil futures etrade
Oil futures easily constitute one of the most traded commodities in the futures market today. As a result, oil futures offer one way to tap into this vibrant and dynamic market.
How To Buy Oil Futures | oxicivaru.web.fc2.com
Learning how to invest in oil futures means understanding the various markets that offer these assets and how you can break into the market. It also means understanding the underlying mechanics of oil futures and how they operate so you can best position yourself.
Need to know How to Buy Oil Futures? | WiseStockBuyer
Anybody with the right type of broker can buy oil futures. Tradestation is one reputable broker to offer futures trading as well as stocks, etfs, bonds, forex and much more.
An oil future is a contract between two people: You can see how you can profit or lose money by buying oil futures. In fact, locking in oil contracts at a lower price helped save Southwestern Airlines millions of dollars when oil prices spiked and hurt all other major airlines.
When it comes to buying these instruments, there are two major exchanges on which they are sold: NYMEX is a commodity futures exchange operated by CME Group based out of Chicago although NYMEX is headquartered in New York with offices across the globe.
NYMEX crude oil futures have a ticker symbol of CL, give the buyer control of 1, barrels of oil, and use the West Texas Intermediate WTI benchmark for oil. Oil contracts sold on NYMEX can be settled through physical delivery the oil is delivered to a hub in Cushing, Oklahoma or settled through cash, which is usually what happens.
The Intercontinental Exchange is an exchange headquartered in Atlanta, Georgia that deals in electronic transactions of futures and other commodities. Oil sold through ICE uses the Brent Crude benchmark. Contracts have a ticker symbol of B, control 1, barrels of oil, and are predominantly settled in cash — although there is an exchange for physical EFP option. The main difference between ICE and NYMEX when it comes to oil is the difference in benchmarks used.
Brent Crude is a blend of oil that comes from the North Sea, off the coast of the United Kingdom. Both exchanges have electronic access, so anyone who has a broker who has access to either exchange can buy and sell futures contracts. Most major online trading platforms have this access, but you do have to be approved. Brokers have the right to deny access to any investor or trader they deem too inexperienced or otherwise are ill-suited to trading futures which can be very risky and very volatile.
This is to ensure that you intend on fulfilling the contract and have the financial means to do so.
How do I invest in oil futures? | Yahoo Answers
Contracts have an initial margin and a maintenance margin. The former is to open the trade; the latter is to keep the contract active. This is true for NYMEX and ICE. The margin varies and depends on the price of the contract.
If you lose money on a trade, you will have to put in an equal amount of money into your account to maintain your maintenance margin, similar to having a margin account with stocks.
Trading oil futures can be exciting and very lucrative; just know, though, that oil is very sensitive and is quite volatile. Also keep in mind that oil is a truly global, fungible commodity, which means that events in one part of the world can and will impact oil prices everywhere. Learn as much as you can about oil market dynamics and be willing to take on risk in order to turn a profit before jumping into the futures market. You can use these tags: Currently you have JavaScript disabled.
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