Ambition is all you need, not affluence! Learning the oil industry is like learning anything else. You don’t need to have an MBA in finance to learn about market trends nor do you need a tremendous amount of money. Nonetheless, the first thing you need to do is study because oil is a complicated industry, and if you make the wrong move in trading, you could lose big time. The market includes everything from jet fuel producers to the companies to extract the crude oil itself. Though the risks may be high and the market may be complicated given that the oil prices sometimes fluctuate due to political events, the returns should be generous and if you make the right moves, your investments will prove beneficial. We’re going to show you a couple of tips and tricks to get you started as an oil investor.
Assess Your Financial Readiness
Now is the time for some serious honesty and self-reflection. The first thing you need to ask yourself is if you have what it takes to become an investor. That is, are you willing to take risks, withstand losses, and have the ambition to come out on top? If the answer is yes, then you’ve got the right character traits needed to be trading in the oil industry, but you also need to make sure that you understand the level of financial risk that is involved in investing. If the income you have is only enough for you to survive from one month to the next, then wait until you are able to put more money aside to start investing.
Get a Brokerage Account
You can’t start trading unless you have a taxable brokerage account, and the application process for you should be pretty easy. (It should be noted that if you under 18 years old, you will not be able to apply for a brokerage account without your parents.) When you finish an application, you need to initiate a deposit and then the account should be activated and ready to go. A broker can always assist you throughout the process.
Do Your Research
One of the most important things you need to have before spending a penny on anything is information. You can do this by first making a daily habit of listening to the financial news so that you begin to get familiar with who tends to perform well and you begin to understand how the market works. Apart from keeping up with the news, it is essential that you collect your own data about the different companies in the market that you might be interested in by doing research and making notes of their performance patterns.
Investment Options for Trading
You have three different investment options to look for when getting yourself involved in oil trading and that is oil stocks, oil funds, and oil futures. Trading in oil stocks involves investing in shares from oil companies and that includes anything from the companies that do drilling to companies that produce jet fuel. ExxonMobil and Halliburton are two important players that you should look into. Oil funds are basically mutual funds in the oil industry and investing in them involves you putting money into a basket of different oil company shares all in one go. The major disadvantage of oil funds is that sometimes the market does not perform very well and oil funds don’t give you the flexibility that you need to diversify your portfolio. Broad index funds would be a much better option for you since it involves buying shares from a variety of different sectors. Oil futures involves trading in oil contracts and generally, it isn’t recommended by the experts.