Trading Financial markets : Oil / Brent Crude

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Dallas
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Sun Jan 24, 2016 12:45 pm

I thought maybe you done your days activities backwards and started with the pub this AM :D
PeterLe wrote: Is there much difference between the spreads with these trading platforms ie Is there a prefered platform for value?
Rgards
Peter
There is subtle difference between each platform so its worth checking a few different ones if you intend to do a lot of volume over time, for the ad-hoc amounts i do its not something i really look at most of the spreads a very similar from one platform to the next and alot are floating spreads rather than fixed so its hard to say which is better than another at any one time.
I think a few platforms do charge a small fixed commission on stocks so scalping these could become costly - so its worth shopping around depending on what type of trading your going to do.
Another thing to look for is the leverage you get with each platform typically it can be between 1:100 and 1:500 so you can profit much more with a higher leverage but also lose more if the wheels fall off a trade.

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Dallas
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Sun Jan 24, 2016 1:05 pm

xitian wrote:And with CFDs, is there a funding cost a bit like spreadbets when you have to roll the contract at the end of the term? So would they be efficient if you hold the position for several years for example? I think with CFDs and spreadbets, because they're leveraged products, you effectively get charged interest on the leverage don't you?

Would it be more cost effective for a long term view to buy an ETF which would have no running costs but probably a higher initial broker cost (and no leverage so you have to stump up the complete notional)?
There is a nightly intrest rate to pay and you do have to switch the contracts each month so for holding a position over several years there is probebly other ways like ETF's but i have never used them and perhaps its best answered by the likes of markmeets302 who does a lot on the finincials.

The longest i ve held a postion for is only a few weeks/months so the CFD are perfect for that as only dip in and out every so often for extra incomes and the leverage is a definate advantage for not tieing up ten's of thousand of pounds.

Ill give you a example of one I one about 18mths ago when fones4U failed i jumped on and shorted carphone warehouse held it for while then picked a no brainer profit as the price rose afterwards.

Perhaps it might be worth starting a CFD/Financial trading thread just so we dont pull this to far off oil as i think there is lots to discuss on the different options avalible

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marksmeets302
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Sun Jan 24, 2016 1:59 pm

Personally I would avoid CFDs, as the interests of the CFD platform and yourself don't necessarily align; you are trading against them. The counterparty risk is also substantial - with a CFD you don't own anything (it's a bet so to say).

For smaller portfolios I'd look into exchange traded commodities like DBO. You can buy and sell them just like stocks. Using a broker like interactive brokers you can buy and sell them for something like $1 commission for 200 lots. Many oil ETCs track a mixture of oil futures with different expiration months, so you don't have to roll them yourself. Basically, you can hold a position forever. The drawback is that this rolling has some hidden costs: often the further away futures price is higher than the nearer. This gap is in a sense what you pay for keeping a position. This can add up quite a bit. If you are thinking about holding a long term position in oil, be warned that it is almost impossible to achieve results similar to the oil spot price. In other words, if you think now is a good time to buy and oil goes from $30 back to $100 in a year or two, don't expect to make $70. Not that strange given that if you actually held the barrels you'd have to pay for storage as well, finance it etc.

If you want to control 1000 barrels of oil, the cheapest way is by buying a future. This is not for small size portfolios though. With a future you also don't own anything, but it is highly regulated and transparent. Your money is insured etc.

andyfuller
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Sun Jan 24, 2016 5:43 pm

A slightly different angle to play on the price of oil would be on the companies themselves, buying shares in them which can be bought in tax efficient ways. Though obviously you aren't then playing a pure oil trade.

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marksmeets302
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Sun Jan 24, 2016 6:42 pm

it's a bit the same reasoning when people buy stocks in gold mining companies instead of gold. The problem is that the profitability of these companies is only for a small part determined by the price of gold (or oil, as for oil producing companies). Efficiency, how they are financed or if they hedged themselves will be very different across companies.

PeterLe
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Tue Feb 02, 2016 10:16 am

I sell into this industry so its very close to my heart (and wallet!)

I noticed a snippet this morning from CEO Bob Dudley on the BBC website..:-

"Bob Dudley, BP's chief executive, told me two weeks ago that he expected the oil price to rise as high as$50-60 a barrel by the end of the year, as the oil majors desperately cut production and demand grows from China and the US"

It will be interesting to look at this thread in feb 2017 and see if he was right?

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Dallas
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Tue Feb 02, 2016 5:27 pm

I caught the backend of a news report where someone was saying they could see it going down to $20 or even $10 a barrell i did nt catch the reasons why or who it was saying it, in the same report it did mension BP are to announess hugh losses with some redundances so there share price will be on its way down - i think someone touched up on trading companies connected with oil earlier in the post

buyshirts
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Tue Feb 02, 2016 5:57 pm

The best option imo is a spread bet. All the gains are tax free and the price is algined to the futures markets. I assuming most people of looking at it as a "short" term (up to 6 months) rather than a longer term investment.

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Euler
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Tue Feb 02, 2016 6:23 pm

I've started selectively acquiring some Oil related plays.

andyfuller
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Wed Feb 03, 2016 3:27 pm

buyshirts wrote:I assuming most people of looking at it as a "short" term (up to 6 months) rather than a longer term investment.
I think that is the wrong way to look at it, I am looking at it as a long term investment and by averaging in I don't need to worry about picking the bottom which is more luck than judgement.

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