The oil trading system basically refers to the mechanism where in people from around the world can buy and sell oil futures contracts at the comfort of their own homes through the internet. Before the age of the internet, only huge corporations and rich people have the ability to engage in such kinds of trades. The internet has indeed caused the further liquefaction of financial capital all over the world by allowing people to trade at virtually any place and at any time. To make this possible, the oil trading system occurs through foreign exchange markets so that transactions with various currencies can easily be facilitated.
What makes the oil trading system attractive to many people is the high volatility that is involved with it. Sure, there are many risks that comes with high volatility as the prices of oil can fluctuate suddenly due to various factors. However, the potential rewards of the oil trading system are also high as well so you can earn huge profits off it. In addition, oil is still a very important commodity today as the majority of the world is still dependent on it for energy. Therefore you are assured that there is always going to be a movement of these underlying assets that are the basis of the trades.
The oil trading system today allows people without much financial to participate in the buying and selling of oil contracts. Oil trading is done through forex brokers which provides the traders with the trading software as well as the analysis of the market. Brokers offer different leverage rates, which refers to the capacity to purchase a valuable amount of commodity with a relatively little amount of financial capital. To put it simply, a high leverage in oil trading increases the potential gain from your investment, but if you lose in the trade, you also lose a lot.
The oil trading system basically uses the concept of directional trading: when oil prices are projected to increase, then the oil trader is expected to buy oil contracts so that he/she can sell it back in the market once the prices start to fall.