A crude oil ETF is a recent entry in the oil investment market that embraces advantages of both long-established commodities futures with a new approach of real-time Internet trading. From newbies to long established oil trading professionals, everyone is searching for methods through which they can access a variety of funds and equities to enrich their investment portfolio. One such technique is investing in oil ETF that is gaining popularity amongst investors over a period.
A crude oil exchange traded fund (ETF) is similar to a stock as it is traded in national exchanges. They carry the same characteristics as a stock such as fluctuating prices graphed through out the day on the chart. However, the main difference is that an ETF is made up of separate securities and equities unlike a stock.
Trading in oil ETF involves a commodity, which in this case is crude oil. Commodities have physical presence and assembling commodity values into an ETF is suggestive of crude oil value, investment opportunities available, and the total resultant of an investment basket. It means, though crude oil is a physical product, oil ETF is a financial product that is bought and sold real time by trading it a fixed volume.
The underlying question is why investors should trade in oil investments considering that the value of oil is potentially volatile. Speculation of prices is also one of the major driving forces behind the volatility. Where there is everyday news coverage on the speculative prices and volatility of oil prices, why an investor should put in his money into intraday trading of an ETF that is exposed to significant risks?
Investors who are playing a large game in the trading market are well known of the fact that oil is one of the largest commodities in the market today. A few major factors like the role United States as the largest consumer of oil and OPEC’s actions in getting together like-minded oil producing countries together to protect their interests are also important while deciding upon the tricks while trading in the market. The value of oil is largely dependent on global politics involving major oil producing and oil consuming countries. According to some traders, one should not underestimate the political involvement in the fluctuation of oil prices and trade keeping in mind the same. Those who want to invest in oil ETF’s should do a good amount of technical and risk analysis research before putting in their money in this volatile yet rewarding commodity.
Disclaimer: Please note all prices are for information only, they should not be relied upon for accuracy or trading. All prices quotes are based on CFD prices and are similar though not always identical to real exchange prices. STOCKTRKR or anybody connected with STOCKTRKR will not accept any liability for loss or damage arising from use of any information/commentary/charts or articles which is provided 'as is' for educational purposes only, nothing contained on this website should be considered as investment advice - please seek proper investment advice from registered financial broker or institution if you wish to trade on global markets and ensure you are familiar with the risks.
