Commodity trading, like that of crude oil, gold, etc., can be either done through physical settlement or trading CFDs (Contracts For Difference), futures and forwards.
Commodity prices are generally more stable than equities and cryptos due to their physical underlying.
Oil trading in UAE has been growing as investors realise the need to diversify their portfolios amid market volatility.
Ways to trade oil
Futures
Oil futures are an agreement to buy or sell oil at a specified date and price in the future.
Stocks
You can gain exposure to oil by investing in companies like ExxonMobil, Chevron, Baker Hughes, and so on.
ETFs
Oil Exchange Traded Funds (ETFs) track the price of oil as a commodity and are traded like a stock.
CFDs
Oil CFDs enable you to buy or sell oil without owning the underlying.
Trading Oil CFDs
Investors can trade oil online using a variety of tools like oil futures, oil forwards, oil-related stocks in the stock market, oil ETFs and oil CFDs.
Oil CFDs make it convenient for the investor to trade in the commodity. CFDs enable the investor to speculate on the commodity price movements without having the need to physically hold oil or other commodities.
Another benefit of opting to trade oil CFDs is that you can either go long (buy) or short (sell), so you can speculate the price movement in either direction.
Why trade oil CFDs?
Portfolio diversification
Oil CFDs can help you diversify your investment portfolio.
Hedging capabilities
Oil CFDs can act as a hedging instrument to balance your risk.
Inflation hedging
Oil prices tend to rise during times of high inflation leading to a good hedge.
Price Volatility
The significant volatility in oil prices provides ample trading opportunities.
Popular oil companies at a glance
Apart from futures, forwards, CFDs and ETFs, you can invest in companies directly engaged in the oil industry. Some of these companies are:
(CVX)
(XOM)
(BKR)
(COP)
(PXD)
Factors influencing gold prices
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