Binary Trading Strategy for Oil
Crude oil is at the center of the world’s economy. It is and has been crucial to our way of live for the last couple of centuries and as a result is the most traded commodity among all the commodity assets. Like gold and water this ranks among one of the main reasons as to why countries even go to war since oil in the end means wealth and power.
When it comes to trading oil the value attached to a barrel of crude oil is a function of the demand and supply dynamics for the commodity the change in value on an intraday basis provides the basis on which traders can go short or long on the crude oil asset in the hope to make a profit.
How to Trade Crude Oil
Like most other commodities, crude oil is traded on a spot and futures basis. Today almost all Binary Options brokers offer this asset for trading thou not many offer different forms of crude oil for trade.
The three forms of crude oil are traded are:
- Light sweet crude (CL)
- Brent crude
- West Texas Intermediate (WTI)
- The contracts of Crude oil futures are traded on the New York Mercantile Exchange (NYMEX), the Intercontinental Exchange (ICE).
- The light sweet crude and WTI contracts are traded on NYMEX
- The Brent Crude Contracts are traded on ICE.
The Binary options trading platform receive from the feeds and allow you then to placer you to open your contracts accordingly.
When it comes to trading crude oil, traders have to understand the contract specifications and leverage/margin requirements for trading the crude oil contracts. The smallest contract, a trader can in the binary options market is a minimum of $25.
The futures contract (which is made up of 1,000 US barrels, i.e. 42,000 gallons) requires a minimum of $4000 to trade
The advantage of course of trading oil through Binary options is that the time frame is short like in general 15 minutes after which you can repeat the process as many times as you like or as long as your funds allow.
Two trading times exist for trading oil:
- The eCBOT (electronic trading) session lasts from 7pm to 6.15 pm EST (next day), Sunday to Friday.
- The NYMEX Open Outcry trading session lasts from 9am to 2pm EST, Monday to Friday.
During these times that the crude oil asset is available for trading in the binary options market. In order then to trade this you have to convert the time to your local time so you trade during the market hours.
Traders who want to trade oil must therefore convert these times to their local time so as to trade during the market hours.
Trading Crude Oil Procedures in the Binary Options Market
Trading oil through binary options will follow technical principles and fundamental principles.
The trader is able to use the charts and candlestick patterns and technical indicators on the charts to come to their trading signal.
The trade type the trader has in view will determined the type of signal. For example
A trader who wants to trade the Touch/No Touch option most likely is more interested in not just in determining the direction of the oil price, but also getting a key price level that the price action will either breach (Touch) or fail to reach (No Touch). And for example the trader who decides to use a resistance level to trade the Touch/No Touch for an price action which is trending upwards, can use this level as a Touch strike price and a price above this as a No Touch strike price if there is sufficient evidence that the asset will be beaten back at the resistance point.
For many this will sound like gibberish for others this is self-explanatory but those that have no problem to determine these aspects know that many what the factors, like the fundamentals of the crude oil asset, are.
Oil trading is almost a global political issue as wars and economic and political shifts in the producing countries will large affect the prices and this is where the fundamental analysis will help you determine where the price will go.
So dive in fundamental analysis and keep a close eye on the news to understand where the price of the oil most likely will shift to. Those that have this right and are able to put this into practice as those that are profitable in trading oil.