Oil trading has always been a profitable business. Even our ancestors made a fortune by trading the oil market. But nowadays, the concept of trading has changed. You don’t have to buy and store the oil to make a profit. Instead, you can use a reputed broker in the UK and trade the CFD market. Due to the intense volatility of the oil market, it becomes hard for retail traders to make a decent profit from the oil market. But following certain rules, it is possible to make consistent profit and change your life just by trading a single asset.
To make your life better, we have decided to teach you the proper way to trade the oil. By following the rules mentioned in this article, you can trade oil with the trend.
Identification of the trend
The first step is to identify the trend. It’s not like you have to buy oil to make a profit. In a downtrend, you can sell the oil and make a decent profit by riding the bearish rally. But taking trades on such market conditions requires you to understand the core concept of trend. Though there are four different stages of a trend, you will need to know the first two. The bullish trend is defined by a clear rally in the price. On the other hand, the bearish trend is defined by a sharp drop in the asset price. You can determine the direction of the trend just by taking the data in the daily and weekly time frames.
Identifying the trading points
To identify the trend trading points, you have to learn about the trend line. The trend line gives you a unique profit taking level where you can take short and long trades. But to use the trend line, you must have a professional platform. Use this link to get access to a great broker like Saxo and open a trading account with them. Use its proprietary platform to take trades with low risk. Finding the connecting point for the trend line becomes hectic for the rookies. But the can solve this problem by using a simple moving average. If you take trades with the help of a moving average with 100 periods, you don’t have to go through the complex analysis in the oil market. If the price is trading above the 100 moving average, execute long, if not, try to short the asset at the resistance level.
Dealing with the price action signal
The elite traders learn to take trade by using the price action signal. To trade the oil market, you must focus on the different forms of Japanese candlestick. The Japanese candlestick pattern allows traders to trade with tight stop loss. In case, you want to secure a big profit without taking too much risk, you have to determine the core factor of the market. No matter how hard you try, you should not take any trade without doing the complicated market analysis. Focus on the core factors and try to improve the skills by using reliable signals.
Determining the risk exposure
The oil traders often become aggressive to make more money. But aggression can’t help you to earn more money. You have to use a simplified approach that will allow you to accept the losses in each trade. For instance, try to risk only 1% when you execute the order at the trend line support. Taking 1 lot of trade when the market hits the support level or trend line is insane. You must feel comfortable with the amount you risk.
CFD trading is a sophisticated business. You must stick to the trend in order to reduce the hassle involved in each trade. Stop trying to bet against the market so that you don’t have to lose too much money. Use a conservative trading technique to improve your skills over time.