How to Invest in Oil Futures

Oil futures are a type of investment contract that will allow you to speculate on the price of oil in the market. This type of contract gives you the right to buy or sell oil at a specific price and can be very valuable if prices in the market fluctuate. Oil futures are contracts that are made between two parties and can be traded in the secondary market. Many investors are intimidated by this type of investment because they are different from traditional stocks. In order to trade oil futures, you will have to get involved with a different type of broker than what you are used to with the stock market.

Futures Brokerage Account

In order to invest in oil futures, you will have to open a new futures brokerage account. There are many different futures brokerages to choose from. All brokerages will allow you to open an account with them. In order to complete this process, you will need to visit their website and fill out a new account application. This process is generally very simple and you will only have to provide them with your basic personal information. You will also have to give them some type of identification when you open the account. They will go over the rules of trading your account and they will then take some time to process your application. If you are approved, they will send you notification and they will give you the information that you need about accessing your account.

Funding the Account

After you have been approved for a futures trading account, you will have to fund the account before you can start trading. Your futures broker may have a minimum amount of money that you have to deposit into your account before you can start trading. You should also find out about the margin requirements so that you know how much money you will need to keep in your account at all times. You can generally fund your account with a debit or credit card. You can also utilize a bank wire to transfer money from your bank account.

Online Trading

Once you have opened your account and funded it, you should be able to get involved with online trading of your oil futures. Most futures brokerages have online trading platforms that you can download in order to access the market in real-time. Before making any trades, you should do a thorough amount of research on the market itself.

Once you are ready to start trading, you can either go short, or long. Going long means that you are going to buy and that you expect the price of oil to increase. If you go short, this means that you expect the price of oil to decrease and you will be able to make a profit when it does.

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