Oil on Forex. The designation of oil on "Forex"

The foreign exchange market is very sensitive to the quotations of raw materials and metals. The reason for the dependence is that operations with currency affect raw materials. On the other hand, the value of the currency also depends on the cost of raw materials and metals. That is, for successful trading it is important to always understand these dependencies. And first of all it is important to understand how the oil affects Forex, as it, especially now, is a leading player.

"Forex" and black gold

Oil plays a leading role in the stability and competitiveness of the economies of many countries. Historically, the dollar and oil are two concepts that are interrelated, because it is the US that produces and consumes an enormous amount of this raw material.

Oil in the Forex market has long been liked by traders as an optimal tool for trading. Today, most brokers "Forex" provide an opportunity to trade this raw material.

Common notation

The price of a barrel of oil is now known by the majority, because it has a direct impact on all spheres of life. Therefore it is important to understand how oil operates on Forex, and to understand all the subtleties of the economy.

Oil, as the most demanded raw materials, is sold in colossal volumes at the auctions, where quotes of the price for a barrel are formed, contracts are concluded. The cost of oil is formed on the main stock exchanges:

- London;

- New York;

- Singapore.

Studying the designation of oil on "Forex", it is important to know the following:

- Several brands of this raw material take part in the auction: Brent, Light, WTI;

- the value of one lot is equal to one hundred barrels;

- the spread level is in the range of $ 3- $ 15. It all depends on the broker.

How is oil designated for "Forex"? The Latin. Mark Brent in quotations will find as UKOIL. The WTI brand is USOIL.

In addition to transactions focusing on the difference in the cost of raw materials (CFD), there is an opportunity to trade contracts for supply in the future (futures):

- The contract for the supply of a barrel of Brent crude oil is denoted as BRN;

- the contract for the supply of a barrel of crude oil of the Light Sweet brand is designated as CL.

These are common notation. This does not mean that the broker can not enter own symbols and designations.

In addition to the letter names of the brands, there is also a letter in the popular designation, which indicates a month if you work with fixed-term contracts, and the figure indicating the year of delivery.

For example, BRN5 means that Brent crude oil will be delivered in June (N) 2005 (5-year supply).

Types

"Forex" gives for work on a choice of two types of contracts:

- the raw materials of Albion are traded under the brand Brent;

- oil from the west of Texas (USA).

UK oil is a mixture of crude oil with a low sulfur content. This is an "easy" oil. Obtain it in the North Sea. The cost of a barrel exceeds the average price of OPEC.

Oil produced in the United States is much more expensive, because it has a more purified chemical composition, sulfur is virtually nonexistent.

Who takes part in trading

The oil market "Forex" is transnational. It meets whole countries, international corporations, small companies, private traders. Trade in this raw material is also possible for airlines to prevent the growth of its value.

On the other hand, participants in the foreign exchange market earn exactly on oil quotes (the difference between the prices of buying and selling). As well as the market of currencies, the market of raw materials is influenced by many factors:

- political;

- economic;

- financial;

- social and others.

How everything works

Oil trading on the "Forex" is conducted against the US currency. The cost is indicated for 1 barrel of crude oil. The price is adjusted based on supply and demand. It can be changed within one day of trade.

Transactions are made directly between the participants: the seller and the buyer. As with any other raw materials, there is no physical deal. This is explained by the speculative nature of the transaction. Prices of quotations can be seen on most trading platforms used by traders. You can see in the form of spot prices.

Unrefined oil is the main indicator of demand. In other words, the growth in demand for oil in the long term may lead to higher prices for gasoline. Traders under the rapid growth of the economy understand the increase in demand for raw materials, that is, the cost of a barrel of crude oil. Stagnation leads to the opposite effect - a drop in the cost of a barrel.

Do I have to trade with oil?

Taking into account that oil is a relatively new sphere, it has advantages:

- Trade in these raw materials will help in diversifying the investment portfolio and generating additional income.

- Most of the currencies and raw materials directly depend on the cost of oil. With a detailed study, this will help in studying the direction of price movement for this raw material. This will make it possible to make a profit.

- The cost of a barrel for "Forex" does not have high volatility. The price changes within one working day. A trader can benefit from this by determining price changes.

What in the end

With the help of the American currency, oil has a strong influence on Forex. In the news, you can often hear that the dollar "provided support" for oil, or oil "exerts pressure" on the US dollar. Following the fluctuations in the quotations of this raw material, the US dollar is also being adjusted. After the dollar, the currencies of other countries are adjusted.

That is, quotes of oil due to the dollar affect the bidding. This must be understood, especially if there are no clear prerequisites for the movement, and the raw materials market "stands" in anticipation of the factors.

Trade in the stock market with raw materials is a good way of investing, and with relatively low risks.

The currency market is special. It is stable, while the economic situation in the country is stable. The growth of the economy promotes the growth of the national currency. Stagnation in development or the crisis reduces the exchange rate. We will formulate a number of conclusions:

- the value of the currencies of the country that produces and exports this raw material, is growing;

- The currency of the states that import oil is lower;

- those states that export oil have a better position than those who depend on imports.

Oil designation for "Forex": UKOIL and USOIL are Brent and WTI crude oil respectively.

Oil trading is a popular sphere of trade. Its development goes on par with the trade in precious metals, currency. But do not forget that before you start trading, you need to develop a strategy, work it out on demo accounts or play with small lots. And only then go to the real market. Because here you can both win well, and quickly lose everything.

Be successful!