Energy trading

Introduction

Energy assets are those assets which are based on crude oil and its derivatives. Trade energy will therefore include crude oil and natural gas. These two are the most commonly traded energy assets. On the commodities platforms, traders may also get the chance to trade heating oil, coal, diesel, ethanol and a few other lesser known crude oil derivatives.

Energy assets are traded as CFD (Contract for difference) instruments on the AG Markets platform. This means that traders can deal on the basis of cash exchange for contracts based on the price movements of these assets without actually owning the physical assets themselves.

Margin requirements for energy assets trading online are much higher than is required for currency trading. Therefore, traders who are interested in trading energy assets on AG Markets’ MT4 platform must be familiar with the contract requirements for each asset.

Structure of energy asset trading

Energy assets are traded as leveraged instruments and are therefore traded on margin.

Contract specifications for energy assets trading on AG Markets

Each energy asset on the AG Markets platform has its own contract specifications. These have to do with:

  • A The minimum trade size, which is usually 1 contract.
  • B The margin requirement for 1 trade contract. This is displayed in Euros, US Dollars and British Pounds.
  • C The spread on each energy asset.
  • D The tick value in monetary terms for each energy asset.
  • E The minimum stop amount, which is the minimum number of pips that the trader can set as a stop loss. This will also affect the minimum number of pips that the trader can set as a trailing stop when chasing advancing prices to lock in profit.

Contracts on energy assets do not have an expiry / delivery date on AG Markets. They can be closed at any time by the trader, so traders do not have worry about contracts expiring on their open trades. You can set your trades and close them whenever you want, or leave them open for as long as you want.

Trade example:

Trader is short 10 US Oil @ 62.00.

A day to expiry, US Oil trades at 59.50..

For this trade, the trader’s position is closed at 59.50 and the profit is credited to the clients trading account. The profit here is calculated based on the number of contracts traded and the difference between entry price and expiration price. Any pending orders that are linked to the contract that is about to expire will also be canceled. Any new trades will have to be performed on the new contract.

What do you need to start trading energy assets on AG Markets?

AG Markets offers traders the opportunity to trade energy assets like crude oil, oil and its derivatives, natural gas and more, all this on their MT4 desktop or mobile platforms. In order to trade energy assets on this platform, traders will need the following:

  • A An account with AG Markets. This account should be well funded so as to cover the margin requirements for each trade.
  • B Access to advanced charting software for technical analysis.
  • C Access to market news which has specific significance to the energy assets being traded on AG Markets.
  • D An understanding of how to use the MT4 desktop and mobile platforms offered by AG Markets.

AG Markets offers traders the following conditions for energy asset trading:

  • Re-quote free trading on all energy assets with fast and efficient trade executions.
  • Minimum trade size of 1 contract or $0.10 per tick.
  • Advanced charting package.
  • Generous leverage

Fundamental triggers for energy assets trading

Energy assets are vulnerable to the following economic fundamentals:

Weather

This is especially important in the US Gulf Coast where hurricane activity may halt production, leading to drops in oil inventories. Also of importance is very harsh winters which lead to increased demand of heating oil.

Political and economic events

Political unrest (Libya in 2011), sanctions (Iraq in 1991 and Iran in 2013 / 2014) and production quota changes by the OPEC cartel are the greatest determinants of prices of energy assets.

Global demand

Therefore, you must have a good knowledge about these events and how they affect, for example, crude oil. Be aware of this events to make better investments in energy assets with AG Markets.

Trade and invest on forex, precious metals, energies and equity indices from one account.

  • merrill lynch
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  • Credit suisse
  • Goldman sachs - bank