How to Trade Oil with Binary Options

Most binary options traders spend the majority of their time trading currencies. While this is a great way to make money, there is another option available that many traders ignore. Trading crude oil offers a way to make money that most traders ignore and are therefore leaving money on the table.

Crude oil is one of the top 3 traded assets on the binary options market, which is why it is important to familiarize yourself with the details about oil because it is going to continue to play an important role in the industry.

About the Oil Industry

The popularity of crude oil is fundamental for modern life. Oil is used to produce energy that powers modern vehicles and the commodity is simply irreplaceable in the near future. It was only during the 21st century that alternative energy sources such as electric and hydrogen have even been considered as an alternate fuel source for vehicles.

The fluctuation in oil prices has a large effect on the prices of services and goods because it effects the change in transportation costs. In addition, the price of oil affects producing countries as well because of the effect it has on export sheets.

Pricing Factors

Traders should consider the many pricing factors of crude oil when deciding to trade this commodity. The best way to approach trading oil is to use both fundamental analysis and technical analysis (using simple moving averages for example) in order to determine what the best entry and exit points will be for a trade. Some of the factors to consider include:

• US inventories reports which are provided each Wednesday
• Monthly oil market reports from the EIA and IEA
• North Sea, Russia, and OPEC productions
• Natural disasters that could affect infrastructure
• Political turmoil in areas that are near major oil producers such as the Middle East
• Economic data from countries that are major oil consumers such as China, the United States, and Europe.

Trading Oil

For those interested in trading oil on the binaries market, the first thing to look at is the inventories report that is released each week. This report shows how many barrels of crude oil the United States holds and this amount will affect the price of oil. It is a simple supply and demand balance. While this information will provide a good starting place for your trading strategy, it is important to look at other reports as well in order to make a more accurate prediction.

Pay attention to the weather reports for major oil producing areas as well as any political turmoil or unrest. These two things can affect the production of oil, which in turn can affect the price.

Conclusion

Overall, trading oil is much like trading currencies as there are many factors that can affect the price. Traders who are not currently trading oil should consider adding these trades to their portfolio as this is a great way to make a profit if the proper research is completed.

The information and opinions appearing in this article do not reflect the views of EconoTimes.