Oil Trading: Simple Steps to Become a Profitable Endeavour

Everyone dreams of starting a profitable side-hustle, a small bit on the side which can see hefty financial returns.

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If you’re looking to start one yourself, oil trading could be the way to go. Yes, trading is complex and yes, if you’re new, you may find it daunting. But if you learn the basics and are ready to begin, you may find oil to be among the most profitable of commodities.

Step 1: Understand the Risks

As with any investment, there’s a high chance you could pump your cash into it and receive… nothing. Investing is part analysis, but it’s also part guesswork and prediction. As long as you’re ready to take the plunge and possible take a couple of hits, you’re ready to move on.

Step 2: Read into the market conditions

It’s important that you read into market conditions so you understand just how valuable oil is at any given moment. Because if you invest in something that’s worthless, you’ve all but burnt your cash with a lighter.

Fortunately, there are plenty of places to offer you an insight into the current oil market. There are dozens of great facts from Money Morning as well as something as simple as the iOS Stocks app to show you information about oil companies.

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In short, how well the oil market is currently doing will impact on your decision to proceed, or not to proceed. If it’s not the right time, then have patience. You’ll make more money by waiting. Besides the oil market, there’s another factor that should feature in your decision too…

Step 3: Assess real-world demand

Real-world situations involving oil can have a big impact on the price of oil, and as such, it would be wise to stay informed. If the world’s oil supply begins to drain fast, the price of oil will rise, making that a good time to invest.

There are other important factors, too. Environmental safety, which causes people to drive less and seek more eco-friendly fuel, can impact oil prices. There will be less demand for oil, which will see its price fall. Families trying to save money may axe the car, which means they won’t be buying petrol.

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So, if the economy as a whole is on a decline, then the price of oil will be affected. A poor economy means people will want to save money, and the car is often the first thing to go.

Step 4: Invest in oil futures

An oil future is essentially a contract between a buyer and a seller. The contract will have a settlement date, and if you invest by that date you can buy oil at the price on the contract.

This gives futures the potential for immense profitability. You won’t have to invest much into them, but you can get a massive amount back – especially if the market changes favourably. From the time you sign the contract, the price of oil could change, meaning you could get more money back.

And with this money, you could plan your retirement or go on a holiday, or start a business. Futures are simple for beginners, and this is the avenue I’d recommend you go down. Follow the first few steps, and you’ll be a master oil trader in no time.

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