In order to trade oil, you will need an oil trading company that buys and sells oil contracts for you in exchange for a commission. They are commonly known as brokerage firms or brokers for short. They are very important in oil trading as an individual cannot participate in one without them. That is because the actual oil trading involves huge amounts of money that most person does not have. This way, oil trading companies makes oil trading more accessible to an average person.
Oil trading companies also make it easier for people to trade oil. They can be easily accessed through the internet so that people who are interested in trading oil can create an account online, at the comfort of their own homes. Most oil trading companies also offer free demo accounts so that novice oil traders can practice first and know what it is like to be in a trading environment without risking any of their money. Another thing that oil trading companies provide is the trading software that you will use for the transactions. While most oil trading companies have their own trading software, more and more brokerage firms are starting to use the widely popular MetaTrader 4 platform. Also, some use a web-based trading platform.
There are certain things that you need to take into consideration when choosing an oil trading company because they are quite crucial to the potential outcomes of your trades. One of these things is the leverage ratio that the oil trading companies offer. Leverage refers to the capacity to control a large amount and very expensive commodity with a relatively little amount of capital. An oil trading company that offers a high leverage ratio will allow you to make huge gains but when you lose, you also lose a lot. Some companies offer 1:50 leverage ratios and it can even reach up to 1:200.
The other things that you have to consider in an oil trading company is their minimum account size, minimum transaction size, their funding methods, their trading hours, their client support services, their banking support, their language support and the spreads. These are all important they can help you ensure that those oil trading companies are suitable for your situation and will cater to your needs.