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You don’t need to be a hedge fund or an investment bank to trade crude oil contracts. Neither do you need to have a six figure bank account. Every individual trader can buy and sell these contracts with an investment as little as $1,000. The only thing you need is a lot of discipline and a strong stomach; oil trading is extremely volatile and you’ll be in for a bumpy ride!

Oil contracts traded on NYMEX represent 1,000 barrels of crude oil. Internet brokers allow you to buy future contracts with a leverage of up to 1:100 which means you will need to buy at minimum a virtual 10 barrels. Such a position will give you a $0.10 profit or loss with every pip the price moves.

For instance, let’s say the price moves from $65 to $67 during a trading day. This will give you a $20 profit or loss, depending on whether you took a long or short position. Your broker will require you to hold a margin of at least $5 per lot, so make sure your balance stays above that limit or your broker will automatically close all your positions.

You can see that you don’t need a lot of money to participate in the oil trading market. But be careful, you are advised to never risk more than 2% of your trading account on one single trade, to avoid you from blowing your account on a few bad trades (which will inevitably happen!). So let’s say you are going short at the price of $72, put your stop loss at $73, and buy the minimum requirement of 10 barrels. Your risk at this point is 10 x $1.00 = $10.00. Your trading account must therefore be at least $500 to stay in the safety zone. Remember this and try not to trade below this limit. In fact, we advise you not to participate in this market if you got less than $1,000 to risk.

So are you willing to take the chance and test your trading skills in the real world? Then open an account with one of the following brokers and have the best of luck!