Where To Find An Oil Broker
An oil broker is in business to assist clients in trading on the world oil market. Most brokers trade by use of an instrument called a Contracts for Difference, in which the trader pays the difference between opening and closing prices. While the Contracts for Difference, or CFD, is used globally in making oil trading transactions, by law it is not available to US brokers. This limits the options available for someone in the United States who wishes to trade on the global market in finding a broker.
U.S. Broker Or Offshore Trader? - A great number of oil brokerages can be located online, and for the American trader this might mean selecting an offshore broker to trade through. There are of course many honest brokerages on the international market, but it certainly would not hurt to do one's homework and seek advice as to which brokers would be the safest to entrust money with. Just as is the case in trading stocks or bonds using a broker, the oil broker is going to require that an account once set up, be adequately funded to enable trades to be made.
U.S. traders can circumvent the problem by trading shares of the United States Oil Fund. The fund is listed on both the New York Stock Exchange and the United States Mercantile Exchange, and shares can therefore be traded by any brokerage house, but it would be in the best interests of a client to seek out a firm which either specializes in such funds or has a fund manager who is an expert at trading in the global oil market.
A Rough Road To Becoming A Trader - Although brokers cannot use the CFD approach, a good one will have connections with oil companies and buy and sell futures on crude oil based on these connections. Anyone can become an oil broker if he or she is willing to get the education and meet the licensing requirements to become one. Most oil brokers have a degree in business or finance, although some will opt for a degree in economic, or even one in energy management to serve their purposes. While a degree isn't necessarily required, it would be very difficult to get a position in a brokerage house as an oil broker without one, and going it alone would be a very difficult if not impossible task. In fact, in the United States an oil broker's career must begin as an employee of a commodities firm.
An oil broker would need to pass a battery of exams to become employed, including the Series 3 National Commodities Futures examination. To be allowed to take this examination requires sponsorship by a commodities or brokerage firm, making it even more difficult for anyone wishing to become a lone wolf oil trader.
Expertise Is Essential For Success - The road to becoming an oil broker is not an easy one, which is a good thing for one who is considering trading in oil futures to know. Not only does a broker have to have the necessary educational background, pass exams, and have a sponsor, but to advance in the profession has to continually satisfy what should over time be a growing number of clients. Trading futures in almost any commodity is not for the faint of heart, and whether one is trading in oil, wheat, or pork bellies, both the trader and the broker has to know what is going on at the moment as well as to some degree be able to predict what is going to happen, tomorrow, next week, and even next year in a given commodities market. Oil is of course globally traded, and a knowledge of global geopolitics won't hurt an oil broker or an oil trader either.