You can use technical or fundamental analysis (or a combination of the two) for oil trading.
Fundamental analysis relies on information and news reports. In oil trading, events like pipeline leaks, supply disruptions, natural disasters, or conflicts can cause price fluctuations. Fundamental analysis involves looking for reports of such events and deciding how they will affect energy markets.
Data about output and extraction can also influence trading decisions, as can announcements about increases or decreases in production or the use of strategic oil reserves.
Technical analysis involves looking at price charts and indicators. Technical traders believe that information about supply and demand influences price actions, which they can see by reading charts and market data.
In oil trading, it is common to employ both types of analyses. Fundamental traders may look at charts and indicators to confirm the effects of news reports and time their market entry. Meanwhile, technical traders may use relevant news reports as signals to start looking for specific price action patterns or indicator signals in their charts.
Finally, you should find a CFD broker like TMGM that offers a demo account. Not only is this practice helpful for novices negotiating the steep learning curve of crude oil trading, but it can also aid experienced traders in testing new strategies and indicators without risking real money.
Frequently Ask Question
Oil CFD prices change depending on several factors, the most
obvious being supply and demand. Events that can increase or
decrease supply and demand include:
- Refinery shutdowns, oil pipeline issues, or conflicts that limit oil extraction and export.
- A country deciding to reduce their oil output. News reports and other announcements can indicate when these decisions may occur.
- Decisions made by the Organisation of the Petroleum Exporting Countries (OPEC) can also affect oil prices.
If you trade CFD products, you can enjoy several advantages,
including:
- These products provide access to spot markets, which are typically out of reach for individual retail traders.
- Energy CFDs have low capital requirements.
- CFDs allow you to use leverage to target profits from small market moves and take larger positions with limited capital.
Crude oil is the most liquid energy market, and you will have a wealth
of information, data, and reports to inform your trading.