What is Crude Oil?
Oil is a term that is commonly used by oil investors and crude oil traders to describe trading activity in the oil market that is carried out by traders, investors and speculators.
In oil trading a trader can buy or sell a crude oil. A oil trader will buy a oil instrument if they think the value of the oil trading instrument is likely to appreciate in the future. A Oil Trader will sell a oil instrument if they think the value of the oil trading instrument is likely to depreciate in the future.
The Crude Oil Market is an over the counter market which means trading is carried out through a network of the big international banks; this oil network is commonly referred to as the interbank network. This interbank oil network consists of banks and oil brokers which are in different locations. These interbank network is responsible for providing the crude oil prices at any particular time to the oil traders and other oil market participants who want to buy or sell crude oil. In oil trading the crude crude oil price is constantly changing and this crude crude oil price is denoted by what is known as a Oil Quote. In Oil the Oil Price is displayed as a Oil Trading Quote. This oil quote is constantly changing and the interbank network will update automatically the current oil quote and crude oil traders can then trade the oil trading instrument at the current crude oil price.
Oil Quotes
crude oil prices of oil instruments is displayed using Oil Quotes. This is the crude crude oil price at which any oil trader wanting to trade this oil instrument will trade at.
Because crude oil prices are constantly changing it means that crude oil traders can take advantage of these crude crude oil price movements to make profits by trading these crude crude oil price movements. The crude crude oil price of any oil instrument will keep moving because of demand supply. This is because there are many participants oil trading instrument in the open oil market and therefore this means that the crude crude oil price quotes will get determined by the current market forces. These market forces may be determined by factors such as an increase in demand for crude oil.
Oil Trading Pips
In oil trading the crude crude oil price moves are measured in points commonly known as Pips in the crude oil trading market. The pip is used to calculate the profit or loss that a Oil Trader makes in a particular trade. For example if a oil trader makes a trade which moves 50 pips in his direction, then the profit of the oil trader will be calculated as 50 oil pips. Pip in oil is represented as the second last decimal point in the Oil Quote and it is made up of pipettes - pipettes are fractions of a Oil Pip.
Oil Trading Lots
In crude oil trading - oil trading instruments are traded in units known as oil lots or oil contracts.
Oil Trading Leverage
Because not many crude oil traders can afford to trade large units of oil contracts, there is oil leverage in oil which means that crude oil traders can borrow money and use the borrowed money to make trades with. For example oil leverage of 100:1 means that a oil trader with capital of $10,000 can borrow upto 100 times using the 100:1 leverage option and therefore after borrowing using this oil leverage the oil trader will have a total of $10,000 multiplied by 100, which means the oil trader will have a total of $1,000,000. This oil leverage is what makes Oil Trading accessible to retail oil traders because retail crude oil traders can begin with little capital of their own and use oil leverage to borrow the rest of the money required for trading. money that the oil trader deposits is referred to as the oil trader's margin and a oil trader can continue borrowing money using this oil leverage option as long as they have the required oil margin in their oil account. This is why oil traders must have the required oil account balance in their oil account to open the trades they want to.
