Oil trading has always been dependent on the actions of pro traders. The pro-UK traders always recommend trading oil after learning all the basics. Without having a strong knowledge of the oil market, you can’t take the trades with discipline. Making consistent profit requires a well-balanced trading method. Using the traditional way of developing a currency trading system is not going to work for the development of the oil trading method. You need to take some special steps and only then will you be able to trade the oil market like the professional traders. Let’s find out more about the key steps that we must take to develop an oil trading system.
Know the oil market
Before you start developing the oil trading strategy, you need to know about the oil market. The majority of people fail because they don’t have any idea about the oil market. You need to know about countries that produce oil on a large scale. Find the leading global players in the oil market. Learn about the news that can impact the price of oil to a great extent. Having a fair knowledge about the oil market is the first thing you should consider for the development of your trading system. After getting the basic knowledge you need, it’s time to create the trading system by using a demo account.
Crafting the trading system
Open a demo trading account with a reputed broker to craft your trading system. You must find the best CFD broker or else you won’t be able to use the professional trading platform. Without taking the trades with the top broker, you will get the faulty price feed which will cost you money. The reason why you will be using the demo account in the strategy development phase is the safety of your trading capital. Unless you can trade the market with a demo account, you will be always under pressure.
First of all, learn to find the trend in oil prices. This can be done in two ways. You can use the simple trend line tools or focus on the 100 EMA. If the price of oil is trading above the 100 EMA, you can consider it as an uptrend. By contrast, when the price of oil is trading below the 100 EMA, you can need to take the trend downward. Based on the direction of the trend, you need to execute the trade.
Look for the price action signals
After knowing the perfect way to find the trend, you need to focus on the trend trading method. Since you will be taking the trades along with the market trend, you need to focus on the major retracement of the market. By using the retracement of the market, you can take the trades with discipline and make significant progress. Things might be difficult at the initial stage but once you learn to take trades with managed risk, you will be able to reduce the risk in trading.
Fine-tuning the trading method
Once you learn to analyze the price action signal, you will be able to execute high-quality trades with a high level of accuracy. Though it will seem very hard at the initial stage once you learn to take trades with discipline, you will be able to make a big profit without having any hassle. Look at the top traders in the world. They all have a very simple trading method. So, polish your trading method with the help of a trend line and simple price action signals. Once that is done its time to focus on the risk management factor.
Dealing with the risk management factor is very easy at trading. You don’t have to deal with the complicated nature while learning to deal with the risk exposure. Risk 1% of your account balance and focus on 2-3% gain. This simple approach will help you to secure a decent profit.