Oil Trading – Oil Binary Option Trading

We live in a world fuelled by oil. The 21st century’s global economy, industries and infrastructures are dependent on this valuable commodity, widely known as “black gold”. So what exactly is it that makes oil such a key player on the world stage? And how can you profit by trading it?

The key to understanding oil is to appreciate its relationship with world currencies, given that it is the primary resource needed for global economic growth. After crude oil is removed from the ground, it is separated into various components which are used in the production of hundreds of products, including diesel fuel, jet fuel, gasoline, ink, dishwashing liquids, deodorant, glasses, DVDs, and toothpaste. Simply put, oil powers our buildings, machinery, and transport, and is an essential component in several everyday goods. The economy therefore benefits during periods of cheap or stable oil prices and this can lead to reduced inflation expectations. The opposite also holds true, that when oil prices are on the rise or volatile, this creates a negative impact on global growth prospects.

Countries like Japanese which import most of their energy are severely impacted and see a decline in the value of their currency when oil is expensive. Sudden surges in oil prices also can impact the U.S. economy and lead to inflationary pressures and increased prospects of a recessions. Countries that export oil however, obviously gain from rising prices and enjoy an economic boost.

For traders, the oil market can be hugely profitable but trends are quick so it is important to respond quickly and effectively to breaking news. Prices typically rise in response to anticipation about global growth, or if there is fear of imminent war or crisis ahead, such as in the oil producing Middle Eastern countries. OPEC decisions on their production and supply are also important influencing factors to watch. On occasion oil can actually increase in value after very bad economic news if there is an expectation that the government will intervene to stimulate the economy. Investors should also take note that dramatic increases in oil prices may lead to uncertainty in the futures markets and a flight away from the dollar to other haven assets that provide more stability.

For an overall picture of the oil market, traders should make a habit of following the weekly Crude Oil Inventories report, released by the U.S. Department of Energy. This report indicates the number of barrels of crude held in storage by commercial firms and so reflects whether global stocks are rising or falling. The data then affects investor sentiment and feeds into the market price.

Done your research and ready to trade? When you are following the news and fundamentals, it can be profitable to trade on a binary options platform. This allows you to profit from simply determining the direction of oil’s value, and negates the need to judge exact price points and degrees of movement.

On Banc De Binary’s licensed platform, shown here as an example, you simply select the time frame of your choice and the amount you wish to invest in the trade, anything from $1 to $8,000. Then click ‘up’ or ‘down’ depending on which way the asset looks set to move. Profits for a correct prediction are typically between 70% and 80% per trade.

This article was sponsored by leading binary options brokerage, Banc De Binary. For further information and analysis, or to try one of their $50,000 demo accounts, simply click the banner below. You could be trading the markets in minutes!

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