We are facing uncertain times as we live and work under a global pandemic. Jobs, livelihoods, and the future that people planned for are looking considerably different than they did in previous years. But for those wanting a career that will always be in demand, why not consider crude oil trading?
As a worldwide leader, supporting those in the energy market, DTN provides an impressive range of courses and training opportunities. Our institute instructors give you the skills and knowledge you need to begin and grow your trading career. Check out the course offerings and connect with a DTN expert to get started.
Why Crude Oil Trading?
Crude oil is one of the most popular traded commodities on the global market, and that’s not likely to change any time soon. And it’s possible to have a lucrative career in trading without an enormous investment in education.
Stand-alone courses and full certification programs are much less costly than a four-year degree. And they can open the doors to a promising career quickly. As long as you understand what you are doing and are prepared to do the work, this career has longevity.
Nationally, crude oil traders make more than $87,000 per year. But experienced traders can make close to $300,000 annually. So crude oil is clearly a lucrative industry.
Begin At The Beginning
Before you start trading, you will need to understand the basics. Committing to an introductory course for oil traders is the best way to make sure you have an overview of this unique industry.
You will learn essential information, such as how crude oil is extracted and a general grasp of how the market works. This level of knowledge is crucial before moving into trading classes.
Start Digging Into The Details
After you get familiar with the generalities of crude oil markets, you can get busy learning all the details. To become a crude oil trader, you will need to understand:
- Legal Requirements
- Financial Regulations
- Supply and Demand
Classes and courses will teach you the essential terms that you will encounter as a crude oil trader:
Oil futures are the most common vehicle for selling or buying the commodity. A future is a contract where someone agrees to buy or sell oil at a future date. This contract locks in the amount of oil, the price, and the date of fulfillment.
A futures contract is legally binding, and both parties must comply. Importers and exporters use these contracts to try to alleviate adverse market changes. Traders use them to benefit from price changes without the logistical work of physically storing and delivering the oil.
An option is much like a future but with one significant difference. This agreement gives you the right to purchase a specified amount at a specific price before a selected date. But unlike a futures contract, an option lets you choose not to execute the trade.
In contrast to futures and options, spot pricing allows you to take physical possession of a set amount of oil “on the spot.”
When you buy “on margin” in oil trading, you borrow money from your brokerage to buy the commodity. However, you need to hold a minimum level of collateral to do so.
Contracts for difference (CFDs) allow you to buy and sell price differences. When you trade CFDs, you speculate on what the market will do without physically owning the commodity in play.
How To Trade In Crude Oil
Unless you have storage for 1000 or more barrels of crude oil somewhere, you do not want to physically hold the crude oil products you’re trading.
Investors use trading instruments like futures, options, and CFDs to get the benefit of buying and selling the product without taking physical ownership of it. If you want to be one of these investors, you should familiarize yourself with the risks and benefits of crude oil trading.
- Widespread Need – For the foreseeable future, almost everyone in the world uses crude oil somehow, and that isn’t changing any time soon.
- Relatively Straightforward – The concept of trading in crude oil isn’t complicated once you have the right training. And since you can make trades and monitor your accounts from anywhere, crude oil trading is excellent for those who want a mobile lifestyle.
- Lucrative Opportunities – There is a range of tools available to crude oil traders to help them make a small investment and enjoy a substantial return. With the right education, you can make a great profit for yourself or become a well-paid employee for a brokerage.
- Uncertainty – While oil supplies are—by definition—limited, we have not yet found all the oil this planet has available (a concept known as “peak oil”). This fact means that new players enter the market every year, which has a roll-on effect on oil prices.
- Geopolitical Factors – The USA is one of the most prolific crude oil suppliers, but it is not the only one. Much of the world’s oil comes from the Middle East and falls under the authority of OPEC (Organization of Petroleum Exporting Companies). Events such as wars, new regimes, and the current COVID-19 crisis impact the crude oil industry.
Overall, Crude Oil Trading Can Be Worth The Investment
Energy markets are exciting and enticing. Although there is risk, as there is with all speculation, crude oil trading offers tremendous rewards. This well-established commodity has a significant history for you to draw on as you begin your career.
The first step, though, is to get the right training and credentials. If you are just getting started, you need to learn the fundamentals first. And if you are further along in your career, you might want to consider full certification.
Talk To The Experts Today
The DTN lineup of courses and training has everything you will need to build a successful crude oil trading career. Reach out to one of our experts today to learn more about what we offer and how we serve you.