How To Trade In Crude Oil Without Fearing Risks
Crude oil trading has allowed earning profit in all markets due to its amazing standing within the world’s economic and political system. One can expect consistent short-term and long-term returns while investing in crude oil.
Some participants fail in taking full advantage and earning profit out of this investment, either because of market fluctuations or because of their less knowledge regarding the pitfalls where they can earn profits.
Crude oil is most actively traded in India with future contracts value in MCX daily. But, unfortunately, due to the involvement of high risks in supply and demand, many people fear investing in crude oil and fail to take the advantage of it.
In this article, Shyam Advisory will try to help you out in defeating your worries, by giving various crude oil trading tips but before that let’s learn some basics about it crude oil.
What is Crude Oil?
Crude oil is known as “Black Gold” and is a petroleum product that is refined to produce gasoline, heating oils, diesel, etc. Crude oil is an essential part of our lives as we directly or indirectly use it either through laptops, pcs, sports items, tea, or even machines.
48% of crude oil reserves are in the middle east. The World’s 40% of crude oil is controlled by OPEC. OPEC stands for the organization of petroleum exporting companies.
Crude oils are of three types:
- Brent Crude
- West Texas Intermediate (Crude)
- Dubai/Oman
What is Crude Oil Trading?
Crude oil trading involves buying and selling crude oil futures and options. It is actively traded on MCX and is all about short-term price and analyzing its real value of crude oil. It is highly volatile and keeps changing throughout time.
Few Crude Oil Trading Tips
- Buy and Hold Strategy:
This is the best and most simple trading strategy. The buy and hold strategy is mainly used by traders to analyze the demand and supply to get the calculated positions. If traders get the right predictions then they close the deal on profit before expiry.
- Technical Analysis:
In this strategy, traders take their decision of investing on various technical factors like charts, candlesticks, and volume of trading. These factors help traders to buy and sell crude oil according to future price movements. The traders need to know the right time to buy and sell crude oil and all the other elements affecting it like demand and supply and other geopolitical issues.
- Swing Strategy :
This strategy means keeping a hold on a commodity for a short period. Traders usually hold up the commodity for few days relying on short-term changes in demand and supply.
With this strategy traders, either buy futures contracts when the market is up and sell all of it when the market s down. Traders in this strategy aim at earning from small movements.
If the market showed any movement which was not expected then traders can face a huge loss.
- Spread Strategy :
In this strategy, a trader buys a futures contract of crude oil in one month and sells another futures contract another month to avoid the risk of buying and selling. The main aim of the trader in this strategy is to earn profit from the expected changes of both buying and selling of futures contracts.
Who We Are?
We don't simply give exchanging tips, we endeavor to furnish you with just those raw petroleum exchanging techniques that will help you make the most out of your venture. Lion's share merchants search for occasions and karma, acquiring a benefit on only a couple of exchanges over an extensive stretch. Anyway, our point is to make a manageable technique that can help you make high benefits reliably. Information and examination-based methodology can assist you with keeping away from the entanglements and dangers of a receptive one.
A couple of focuses that different us from some other assistance in the market are:
- Our prosperity rate has reliably remained around the 95% level.
- We have curated an extensive arrangement of raw petroleum exchanging guides for amateurs, intermediates, and surprisingly prepared merchants.
- Give the correct direction to customers before the venture of a sizeable capital.
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Shyam Advisory suggests that crude oil prices are volatile and any trader who is interested in this commodity future contract should have a solid strategy to trade. Crude oil trading is also affected by other geopolitical issues which can affect the prices.
To know more about the supply and demand of crude oil futures contracts or crude oil trading tips, stay connected with Shyam Advisory and get full knowledge of how to trade in crude oil without fearing risks.
Commodity Trading Tips and Myths
Commodity trading has become a lucrative option for the participants in the stock market. The commodity is a physical wealth different from the stocks. You don’t need to trade the commodity physically; all you need to trade the commodity contracts. Commodity trading consists of futures and options. The most popular commodities are Gold, Silver, Copper, and a few agricultural commodities. For successful commodity trading, you should know the commodity tips.
Three primary types of commodities are:
- Agricultural commodities (Coffee, cocoa, wheat, etc)
- Metals (Gold, Silver, Iron, etc)
- Energies (Crude oil, Coal, and Natural gas)
Buying and selling commodities are completely different from trading stocks. For the commodity exchange, you should know the latest commodity trading tips. Commodities are volatile instruments; you need commodity market tips to navigate the risk or else you’ll be crushed by the Commodity trading market.
Tips for Successful Commodity Trading
1. Use the leverage judiciously
In commodity trading, there is high leverage. You need to pay a small number of margins to trade the commodities in India. For example: In index features, you need to pay a 10% margin that is 10 times the leverage, and for in-stock futures, you have to pay a 15% margin which is 6.6 times of leverage. For commodities, the leverage is higher.
Keep 2 things in mind while using the leverage in Commodity trading. First - define the maximum percentage of the capital that you are ready to lose. Second, in leverage positions both profit and loss are magnified.
2. Ignore overtrading and Margin calls
Many traders do not trade for profit only but for the satisfaction they get after profit. Under this, you end up with overtrading. If you think, overtrading will cover all your losses then no. It doesn’t work like this under commodity trading. Make sure that you don’t get any margin calls from the exchange.
Overtrading might lead you to a huge capital loss. Be very keen and smart while investing in commodities. You can take the help of Shyadmavisory for the commodity trading tips.
3. Trading the Trend
Commodities follow large cycles and sub cycles, so you trade on the trend. You will face high volatility in commodity trading but you need to catch the trend and trade. You can try a contrarian approach for commodity trading because commodities are homogenous and the key is to trade under the trend for successful trading.
4. Keep Stop loss
Stop-loss should be used for all types of trading; however, it is highly beneficial for commodity trading. The reasons are: as commodities are highly leveraged to manage your loss, stop-loss is necessary. Second, stop loss will make sure that you are not over-trading over one commodity, as it leads to high risk.
For example, you might have bought gold at a higher price and low level, and now you want to average the position. Instead of doing average, learn about the trend and start fresh.
5. Watch Supply and Demand
Commodities thrive on short-term fluctuation in supply and demand. While analysing the real-time price, pay attention to the supply-demand curve of the commodity. For example, crude oil prices fall to -37.63 because of less storage capacity and a massive economic change.
6. Conserve your Capital
Plan and make rules before starting trading. Your trading plan will help you to understand how much you are ready to lose in a day or week while trading. Your plan should cover how you are going to conserve capital and shift to cash. Commodity trading is all about managing risk and conserving your capital. If you can do both, you are going to stay in the market for a long time.
7. Currency Dynamics and Economy
The currency market affects commodity price fluctuations. Most commodities are affected by the US dollar as they are priced in the dollar. Even the US dollar affects the Indian rupee rate exchange and impacts the few commodities like Crude oil, Gold, Copper, etc, in the local market.
Global economic growth highly affects industrial commodities. Due to the coronavirus pandemic, the global markets are facing the worst recession period.
Myths of Commodity Trading
- Availability of Information - For popular commodities like Gold, Crude oil, and base metal, you can easily get the information. Brokers offer commodity trading and information to commodity investors.
- Huge investment - Most of the commodities required 4-5% of the total value of the contract and not a huge margin.
- Extremely Volatile - Metal and energy commodities are only increased by 6% and the agriculture commodities are raised to only 4%. However, the metal commodity is greatly affected by the global economy and market.
- Delivery is difficult - Many people think that they need to physically deliver the commodities which is not true. Because only commercial investors are responsible for the delivery of physical commodities.
- All about Speculation - Many traders think that commodity trading is only for speculative purposes. In all the financial markets, there are three types of people: hedgers, arbitrageurs, and speculators to find the price risk management on a particular commodity. Speculation is not pure gambling. Speculators help the hedgers to transfer price risk by injecting liquidity.
Commodity trading and stock trading are quite the same but the financial leverage in commodity trading makes it a risky affair. With proper risk management and knowledge, commodity trading is a profitable affair. You can check out Shyamadvisory for commodity tips and share recommendations.
Pros and Cons of Intraday Trading Depend
Intraday trading means buying and selling shares on the same day and traders close their position before the market closes. You can make quick profits from intraday trading. Traders need to constantly monitor the market to make a profit in intraday trading. It is for high-risk traders. You can make huge profits by using the best intraday tips. Shyam Advisory is the best intraday tips site.
Pros of Intraday trading
- Make profit in falling markets
Long-term investors make a profit when the stock price goes up, which increases the value of their stock in the market. For long-term investors or traders, the bull market is the best way to earn profit. However, short-term traders or intraday investors even make money in a falling market. It is called short-selling, the best intraday tip.
Under short-selling, traders sell the stock, when the price is high and again buy the same stock when the price reduces. The buying and selling of stock should be done on the same day. Only intraday trading allows the selling first and buying later trading in the cash segment.
- Finish the trading within a day and sleep peacefully
You don’t need to worry about your position and your stock price in the market, as under intraday your position is closed within the same day. Your money won’t get stuck. You will get the information about your profit and loss before the night. Also, any sudden fall in the stock market won’t harm you as you haven’t invested in any long-term stock. Do intraday trading and sleep peacefully. Before investing check out today’s intraday tips to earn a huge profit.
- Use margins and go for bigger bets
When you buy stocks in intraday trading, the broker knows that your position will be closed by the end of the day and there are no chances that the price of your stock will become zero. Stockbrokers allow intraday traders to pay a small amount to buy the stock against any loss.
For example: if your trading account has Rs. 150, then some brokers might allow you to buy stocks of Rs. 1500 - 2000, based on the amount you have in your trading account. Some brokers offer 10 to 15 times leverage.
However, this offer is provided to those traders who generate a good brokerage for the brokers. Invest in intraday trading and make a profit on the same day as intraday trading tips.
- Fundamental’s knowledge is not required
Price fluctuations affect intraday trading most. The price fluctuation doesn’t depend on what type of company or stock it is. When the stock has high liquidity and volume, the price will fluctuate irrespective of the current situation. It is the best opportunity for traders to invest and make a profit.
The study of companies’ financial status is known as fundamental analysis. Fundamental analysis is a time-consuming process. Whereas technical analysis is all about analysing the price movement of the stock irrespective of such factors. Examining charts for the investment is the common intraday tips used by most intraday traders. Hence, you don’t need to research and do deep study to earn profit in intraday trading.
- Source of Regular Income
Intraday trading is a source of regular income as you can withdraw your invested money daily. You might have to face risk in intraday trading, but the profit is worth risk taking. While regular investment in stocks will not be in your favour always. With knowledge, time and money, you can make intraday trading as your regular source of income. Most people invest a small amount of their income in trading daily and enjoy the profits. Check out Shyamavdisory for the best intraday tips.
- Update on Stock market and economy
Out of all the traders, intraday traders got to know about all the changes in the market first. Stock markets provide all the information about economic changes and social occurring. The stock market is affected by everything whether it is election, pandemic, or any natural disaster. And all these changes are seen by intraday traders first.
Moreover, intraday traders even make a profit from sudden reactions like RBI new policy, or any major changes. Learn about the volatility and make profits even when the stock market is changing.
Cons of Intraday Trading
- The investment required in intraday trading is less compared to delivery which creates high chances of risk by traders. One wrong decision can lead you to the path of loss.
- If you are facing loss daily, it might affect you personally.
- Many traders lose money due to improper study and wrong intraday tips given by random social media groups. Check out Shyamadvisory for the best and professional intraday tips to make money.
- If the market is going against your trading position, there are high chances of facing big capital loss.
- You can consider it as a source of daily income but not a fixed and sure income.
- Intraday trading demands time investment. You need to read charts and figures to understand the market changes.
- There is nothing like dividends and bonus benefits exist in intraday trading.
- Intraday trading also has high brokerage costs. For each stock, you have to pay a small amount from your margin to the broker.
However, every coin has two sides. Likewise, intraday trading has both pros and cons. But with the help of expert intraday trading tips, you can earn a huge profit.
