How to Trade Crude Oil CFDs in a Volatile Market

As an asset, crude oil has been one of the most important energy sources in the world for almost a century. In addition to powering vehicles, oil products are also used to heat buildings, produce electricity, and even as a material in creating certain products.

Because of this, oil has consistently held a relatively solid price over the last 50 years. However, since it's both sought-after and rare to find, oil is susceptible to price fluctuations, particularly after major macroeconomic events.

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What Is Crude Oil CFD Trading?

To trade with the price change of oil, you'd have to buy/sell it when it hits a low/high price and sell/buy it later for a potential profit/loss. However, unless you have the logistics to manage this (including storage and resources), buying and selling physical oil is a difficult feat. This is where crude oil CFDs come in.

Namely, a CFD, also known as a contract for difference, is a derivative financial product that allows you to trade with the price difference of an asset without having to physically own it. CFDs give you great exposure to the market as they can be used to trade a wide variety of assets, including crude oil price. Moreover, traders can use leverage to magnify their potential profits or loss, even if their starting balance is low.

Of course, CFD trading is not risk-free, as you'd have to risk at least some of your capital to potentially profit from it—and this is magnified in the case of a volatile asset like oil. Still, those who know how to trade CFDs could get potential profit from these price fluctuations.