Below is How To Trade Oil In South Africa
What is oil trading?
Oil trading is the buying and selling of different types of oil and oil-linked assets with the aim of making a profit. As oil is a finite resource, its price can see massive fluctuations due to supply and demand changes. This volatility makes it extremely popular among traders.
You can use CFDs to trade on oil’s spot price, or the prices of oil futures or options contracts, without having to own any actual oil.
There are three ways you can trade oil:
1. What is the oil spot price?
Oil spot prices represent the cost of buying or selling oil immediately, or ‘on the spot’ – instead of at a set date in the future. While futures prices reflect how much the markets believe oil will be worth when the future expires, spot prices show how much it is worth right now.
What are oil futures?
Oil futures are contracts in which you agree to exchange an amount of oil at a set price on a set date. They’re traded on exchanges and reflect the demand for different types of oil. Oil futures are a common method of buying and selling oil, and they enable you to trade rising and falling prices.
Futures are used by companies to lock in an advantageous price for oil and hedge against adverse price movements. However, they’re popular among speculative traders too as there is no need to take delivery of barrels of oil – although you have to fulfil the contract, this can be via a cash settlement.
The two most popular types are Brent Crude and West Texas Intermediate (WTI), which are traded on the Intercontinental Exchange (ICE) and New York Mercantile Exchange (NYMEX) respectively. They are used as benchmarks for global oil prices, as well as economic health.
What are oil options?
An oil option is similar to a futures contract but there’s no obligation to trade if you don’t want to. They give you the right to buy or sell an amount of oil at a set price on a set expiry date, but you wouldn’t be obliged to exercise your option.
Decide how you want to trade oil with us
|Oil spot price||Oil futures||Oil options|
|Way of trading||CFD trading||CFD trading||CFD trading|
|Can I short oil?||Yes||Yes||Yes|
|Can I speculate on negative oil prices?||Yes, if the futures we use to price the underlying market are negative||Yes, if the price of an oil future is negative, our price would also be negative||Yes, if the price of the underlying futures were negative|
|Will my position expire?||No, there are no fixed expiry dates||Yes, at the date of expiry||Yes, at the date of expiry|
Trading on oil
You can trade oil spot prices, futures, and options with us via CFDs. Alternatively, you could speculate on the price of oil-linked ETFs and company stocks to get an indirect exposure.
Our oil spot prices are based on the two nearest futures on the market in question. This means you’ll benefit from continuous pricing – enabling you to see charts across the market’s entire history, rather than just the duration of a single future – and no fixed expiries.2
Our undated contracts are useful for taking shorter-term positions and performing technical analysis over a longer timeframe.
Once you’ve created your account and logged in, you can trade oil spot prices by:
Searching for the oil market you’d like to trade – ie ‘Brent Crude’
Selecting ‘spot’ in the right hand panel
Choosing your trade size and opening your first position
Create your oil trading account
Simply fill out our online form to open an account – there’s no obligation to add funds until you want to place a trade.
Find your oil trading opportunity
You can trade a variety of oil markets including popular crude oils WTI and Brent Crude, as well as no lead gasoline and heating oil.
The best way to identify an opportunity is to keep an eye on breaking news and key price levels, using our range of tools and resources:
Get technical and fundamental analysis straight from our in-house team
Keep your finger on the pulse with unique price and economic data alerts
Get actionable ‘buy’ and ‘sell’ suggestions based on analysis
Discover price trends using popular indicators such as MACD and Bollinger bands
Open your first oil trade
Now that you know how you’ll trade and what you want to focus on, it’s time to open your first position.
You’ll need to choose whether to buy or sell the market – depending on whether you think oil will rise or fall in price – and decide on your position size, which will determine the margin you pay.
This is also a good time to think about how you’ll mitigate risk. We offer a range of solutions for risk management, including stop-losses and limit-close orders – these are used to close trades at predetermined levels of loss and profit respectively.
How can I buy oil shares in South Africa?
To access Crude Oil Futures and Options, investors need do is register as a client with an authorized member firm, deposit the required initial margin and sell or buy according to their needs.