Online forex and commodity trading
Since oil prices are also impacted by world events such as politics and socioeconomic situations, including the Middle East crisis, it helps as an oil trader to keep on top of news so as not to get caught out by an unexpected shift in oil prices.
Other factors influencing oil prices include decisions by the Organisation of Petroleum Exporting Countries OPEC and other major oil producing nations, such as Iran, on how much oil is produced and supplied to the market. An ability to try and forecast how well or badly the world economy may fare in the months ahead is a definite plus point when it comes to trading a commodity like oil. But there is plenty of news that can cause fluctuations in the price on a day-to-day basis — and on an even shorter-term scale than that.
If for example the US releases figures that show its economy is improving more quickly than expected, this could cause a surge in the price of oil as traders start to bet that demand will increase, consequently putting up the cost of a barrel. Or it could be that an oil-producing country resists international pressure to stabilise oil prices by increasing production. This could see further slides in the oil price as investors worry that more of the commodity will be produced than is needed.
It really is a market that can be buffeted by plenty of world events, so it pays to stay on top of major economic news releases.
Another enduringly popular commodity is gold, which has long been considered a store of wealth and has held a special allure for many of us — as the Californian gold rush back in the s would undoubtedly attest. Traditionally, in times of trouble and market volatility, gold is perceived as a 'safe haven' — somewhere for investors to store their money away from other riskier assets.
Although the yellow metal can in theory be traded in many currencies, the typical market quote is to price gold in dollars, usually as 'dollars per troy ounce'.
This relationship to the US dollar is an important one and is another factor that will have an influence on the price of gold. If the dollar becomes more attractive to investors and starts to rise, the price of gold will usually drop. In recent years, some people have seen the US dollar as a safe haven for their money and that has reduced the appeal of gold. This is another aspect to weigh up when trading gold: For example, if the US central bank, the Federal Reserve, decided to cut interest rates, this would normally weaken the US dollar and lift the price of gold.
As with oil, because gold is such a global commodity it pays to keep a watchful eye on the major economic announcements such as interest rates and unemployment figures, which are released on a regular basis. The energy markets are also popular among commodity traders. The advent of renewable energy has generated added interest for commodities such as national gas, heating oil and gasoline. One way to get a feel for commodity markets is to watch their moves over a period of time so you can experience the sort of things that happen and understand what makes prices change.
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CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.
Exchanges and ECNs generally offer two methods of accessing their systems —. From an infrastructure point of view, most exchanges will provide "gateways" which sit on a company's network, acting in a manner similar to a proxy , connecting back to the exchange's central system.
Many brokers develop their own systems, although there are some third-party solutions providers specializing in this area. Some banks will develop their own electronic trading systems in-house, but this can be costly, especially when they need to connect to many exchanges, ECNs and brokers.
There are a number of companies offering solutions in this area. Many types of algorithmic or automated trading activities can be described as high-frequency trading HFT , which is a specialized form of algorithmic trading characterized by high turnover and high order-to-trade ratios. From Wikipedia, the free encyclopedia. Not to be confused with E-Trade. This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources.
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