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How to Make Money Trading Crude Oil in India

Date: Dec 7, 2022 | Time: 06:14:00 PM | Author: Editor News

Crude oil is an unavoidable factor in the Indian market since India is the third largest consumer of crude oil in the world after the USA and China. Moreover, investors who have ventured into crude oil trading can be profitable due to its features such as global market volatility. In the past few years especially, this volatility in the energy sector has further increased. It signals that the crude oil market can deliver consistent profits for long-term timing techniques and short-term swing trades. Henceforth, if the prices and fluctuations of the market are familiar, then the above said profit can be gained easily. Apart from this basic aspect of crude oil trading, there are a few more tips that can be followed by an investor to earn benefits from such trading.

Get guidance from institutional investors

Institutional investors are organizations or firms that invest their wealth on behalf of members or clients. Here, these investors would be national oil companies. They are more likely to buy crude oil in more quantities than others and they could be more experienced in the field. If you too are planning to venture into crude oil trading, you may get guidance from them. Your analysing of its market would be much clearer when you are trying to pursue the strategies they have been using to make money.

Try to follow the right strategies

Just like gaining money from other forms of trading, in crude oil trading, you need to follow certain effective strategies such as analysing the long-run charts. By doing so, you will be more aware of the highs and lows of the market history and what led to the price fluctuations in the past. Furthermore, the right strategies should be formulated once considering the global trends. It can be done with the help of brokerage business specialists, as you are investing in volatile crude oil stocks.

Study the demand and supply of oil

Investors must take note of the expiration date of the contract they have taken each month. In most general cases, it would be the 19th or 20th of each month. Moreover, to square up the portfolio positions, it is crucial to reposition. The demand and supply of crude oil are depended on global prosperity and the economy. For instance, when the global demand is increasing and the supply is rising, then it is considered a favourable time to sell. Likewise, Indian investors can sell their crude oil at a better price when there is more demand, yet production is lower. Therefore, one must trade their crude oil as per the demand and supply game.

Types of crude oil also matter

There are basically two types of crude oils, namely Brent crude and West Texas Intermediate (WTI). They differ in their sulphur composition, weight, place of extractions and others. In India, the Brent crude oil produced from offshore is preferred and is traded on the National Commodity & Derivatives Exchange (NCDEX) or Multi Commodity Exchange of India (MCX). Due to global energy consumption, it is one of the most volatile markets and you must be aware of the transactions that occur daily basis.

Conclusion

Trading in crude is a vital aspect of the growth of the economy. Henceforth, before setting out for trading, investors must ensure that they have studied the basics of fundamental and technical analysis of the stock. Even while you are selecting your stockbroker, do a thorough study about them. Without these significant steps, you have more chances of losing your money than earning it.

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