Given the recent unprecedented interest in trading WTI Crude Oil, Synergy Markets have released an in-depth analytical report to educate traders on the 5 key areas they should be aware of before they trade crude oil:
The History of Crude oil, and the WTI Contract. In order to understand what it is that’s driving the current market and recent volatility, skilled traders need to properly understand the history of the product, and the parties involved in the search for price discovery.
What will happen over the next upcoming futures contract expiry? Should we expect a similar sudden erosion of value due to oversupply?
Should traders try and take advantage of extreme market volatility caused by COVID-19 or sit on the side-lines until some kind of market normality is regained?
The understanding of the politics behind the contract; the supply and demand issues; the technical – all are the many keys to formulating a successful trading strategy.
Is buying and holding crude at these prices sensible?
Christian Dove – the head of Synergy Markets commented on these points:
“I know many retail customers out there are desperate to benefit from what they see as huge opportunity to trade crude oil at these low prices. However, I advise – if you intend to trade oil, then please do so with great caution. I think we could easily see prices squeezed and more significant drops in to the next futures expiry – followed by a significant rally as demand re-ignites and as the current oversupply is exhausted and the inevitable lag for supply to be turned back on.
To buy at these levels may risk being closed out on margin if prices drop a relatively small amount – so if you have to please trade sensible and within sensible risk parameters. I’ve had the Synergy analyst write up this detailed report to help our clients in understanding the product and to aid in formulating their strategies. I personally will choose the strategy of sitting this one out and just watch as we all learn what the next chapter of the story in Crude Oil will be.”