The Causes Behind Oil Stock Fluctuations

Commodities, such as oil, gold, tea, and such are physical substances and thus are more susceptible to the various effects of the natural and man-made world on them. Commodity traders all understand that they will experience more fluctuations on the prices of their holdings than they would if they held bonds and stocks, but many will argue that greater risk (fluctuation) equals greater rewards.

Looking at oil specifically, there are plenty of factors that impact the value of oil stocks in international exchanges and markets. These are what we will be looking at here. Before diving in, it’s prudent to keep in mind that commodity prices obey the simple cardinal rule of supply and demand – what we’re looking at here are basically some of the factors that influence the levels of either of these two essential qualities, in no particular order of importance.

OK. Let’s get into it.

Organization of Oil Producing Countries (OPEC)

Historically speaking, it cannot be denied that OPEC is the most substantial determinant of the prices of oil stocks in the world. The organization was created in order to introduce some measure of coordination in the global oil industry by bringing together different oil producing countries so that they can regulate oil supply levels, thereby avoiding catastrophic collapses or unsustainable gains.

The 14 member countries are Angola, Algeria, Equatorial Guinea, Ecuador, Gabon, Iraq, Iran, Libya, Kuwait, Nigeria, Qatar, the United Arab Emirates, Saudi Arabia, and Venezuela. Combined, they have control over a whopping 40% of the world’s oil supply.

In keeping with their policies, or global market conditions, they are able to come together and decide whether to increase or decrease the supply of oil on the world market, effectively influencing the price of oil stocks. With the decreased reliance on Middle Eastern oil by the USA in the wake of their recent advances in oil extraction, OPEC nations have less ability to cause international oil market catastrophes on their own.

Read more: Oil Stock Fluctuations

How to Choose a Forex Broker

Choosing the right Forex broker can be an overwhelming task especially for beginners.

After sharpening your learning trading skills, you need to find a reliable Forex broker. A Forex broker operates as a bridge between retail traders and liquidity providers (commercial banks, central banks, hedge funds, etc.). It is very important to select the right broker.

Here are some basic tips when choosing a Forex broker:

DEMO ACCOUNT

The vast majority of Forex firms offers a demo account to all new clients. This provides a good chance for understanding how the system of opening/closing positions actually works. Moreover, a demo account is also important for testing the trading cost (spreads) and the actual slippage on order execution.

→ Offering a Demo/Practice Account

RELIABILITY AND REGULATION

Retail forex trading is an OTC industry and that means there is no centralized control over the operations of every participant. However, Forex brokers will be forced to follow some rules as long they are regulated by a reliable authority. Here are some key points towards ensuring the reliability of Forex brokerage services:

→ Headquarters country

→ Regulated by a reliable authority (for example FCA UK)

→ Client account segregation (separating client funds from operating funds)

Read more: How to Choose a Forex Broker

How Does Inflation Affect Exchange Rate?

The attractiveness of a particular currency at the forex market is determined by many things. The economic strength of a nation relative to another, however, is the most important factor. The strength of the economy itself is also affected by issues like inflation.

There are many factors in the economy that change inflation and thus affect the affairs in the forex market. The exchange rate of a particular currency is heavily influenced by how economic affairs within a country are managed. While there are many factors that affect the exchange rate of a currency, none is quite as instrumental as inflation. Inflation directly affects the price of goods and this has a direct impact on the value of the currency as well. So how exactly does inflation affect the exchange rate?

It changes the level of demand for the currency

Inflation causes goods from a particular country to become more or less attractive. The world is connected through trade. When the prices of commodities in a country increases, its goods become less desirable to those outside its borders. All countries exchange their currencies for others so that they can be able to trade effectively with their global partners.

Read more: Inflation and Exchange Rates

Different Binary Options Trading Strategies

In a previous article, Trading Center presented readers with the basics of binary options trading. The article touched on the technical and general rules for trading binary options. Now, let's delve a bit deeper into binary options by studying different trading strategies that you can use for your sessions.

The Basic Options Strategy

This style is one of the most utilized strategies by binary options traders and for good reason. With basic options strategy, traders are protecting themselves from incurring a lot of losses. This strategy is about picking an underlying asset or a Forex pair and then waiting for any market movements of the strike price. If the prices are heading up, investors place a call option.

Let's use the USD/EUR currency pair for this example. Say that this pair is predicted to hit 1:3000, and you get $100 if you're right. You place the call option, which will expire in an hour. The payout is 70% if you win and 30% if you lose. Say in the first 30 minutes, the price of the USD/EUR pairing hits 1:3016. This is good so you buy a put option for the same pairing at 1:3016 expiring in the next 30 minutes. In this case, there are two possible outcomes when your binary options contract expires.

First outcome: your one hour call option wins, and the 15 minutes put option will lose. If this happens, you'll earn $170 from your 70% call earnings, and a 15% refund from the put option that lost. Of course, the reverse can always happen, meaning you only win 30% of your capital and a 15% rebate from your call option.

Second outcome: this is the best scenario because both your call and put options were predicted correctly. You will get $340 in total ($170 x 2).

It's impossible to lose in both scenarios so you're only risking the loss of $15 during your sessions.

Read more: Different Binary Options Trading Strategies