Heating Oil Futures

When trading crude oil, heating oil and other petroleum based futures contracts on the New York Mercantile Exchange, huge amounts of money change hands constantly, meaning the market is very liquid. In the previous years, crude oil news detailing price swings have always moved the other commodity prices. These price movements and the corresponding liquidity makes it a top trading vessel for numerous other good markets over the globe.

Full sized crude oil futures contracts represent a thousand barrels of the said oil. The needed account margins are approximately $4,000 and controls around $55,000 worth of crude oil. This is approximately six percent leverage or what the trader normally refers to as the good faith money down.  Every full point move or trade means a sum of a thousand dollars. A move from thirty dollars to forty dollars a barrel equals to a ten thousand dollars gain or a loss if the opposite happens.

Traders seeking for a minimized trade risk usually trades mini heating oil futures contracts. A mini contract is one-half the size of a full contract of the said oil. Approximately $2000 covers the margin for the mini contract. Currently, electronic trading oil market systems have been introduced into crude oil and heating oil futures to ease the dealers’ trading endeavors. This is definitely good news to the long term investors as well as for short-term investors. Furthermore, stop-loss orders has now been enabled for the mini-contract as well as full size heating oil futures contracts during the trading sessions in entirety.

The main purpose of any investment is to get good returns on the invested money. This is why people invest in crude oil futures as they promise to bring back a good return on the invested money due to their constant changes in their prices. However, most of the investors are not aware of the technicalities of investing in heating oil futures and usually face complication when they get into it. This should not be an issue though, with a little patience and persistence, an investor will definitely make some good returns by investing in heating oil futures.

To invest in heating oil futures, the investor must understand that oil futures provides them with the right to buy or sell the heating oil at the hold price but within the expiration date. But in order to be allowed to take part in the trade, the investor must pay some predetermined premiums. Investing in heating oil futures is just like investing in stocks with the difference being that the traded commodity is heating oil and its products. And as mentioned above, crude oil futures are traded in barrels while heating oil futures and unleaded petroleum futures are dealt in gallons.

Heating oil futures are normally traded through an online trading platform which is provided by brokerage futures company. In order to qualify for the trade, an investor’s eligibility is determined by their net income, investment experience, their net worth and their ability to take financial risks. Once their eligibility to take part in the futures trade is approved, then they should deposit the minimum amount required for opening a trading account, afterwards they are ready to start trading in their desired heating oil futures.

Even though the chosen brokerage firm will provide the investor with essential heating oil futures trading tips, for instance on when to exit or enter the trade, it is always beneficial for the investor to do some technical analysis and enough research on the future commodities they are interested to trade in so that they can get a fair idea on what they are getting themselves into.

Comments are closed.