What is spot oil and how do you trade it?

Note that derivatives trading is high risk, and you should understand how they work and manage your risk carefully before opening a position.

Access real-time pricing

When trading oil on the spot, you’ll access prices which reflect the current market in real-time. The spot price is unlike the oil futures market, which specifies a price and date for a future transaction.

Get tight spreads

Oil spot spreads are tighter than those of futures, making them ideal for opening short-term positions. Note that overnight funding fees will apply if your position is open past 10pm (UK time)².

With us, your account will have its interest adjusted to reflect the cost of funding your position. If you want to avoid paying overnight funding, you might want to consider opening longer-term positions such as trading futures or options.

Trade with leverage

With us, you can trade CFDs, which is a leveraged product. This means you’ll only be required to commit an initial deposit or margin to open a position that’ll give you increased exposure to the spot oil price market.

Remember that when trading with leverage, your profit or loss is calculated based on the entire size of your position, not just margin. This means that while leverage can magnify your profits, it’ll amplify your losses. It’s important to manage your risk carefully.

Before trading leveraged products, ensure you understand how they work. Also give some consideration as to whether you can afford to risk losing your money.

Go long or short

When trading the oil spot price, you have the option to either go long (‘buy’) or short (‘sell’). You’ll go long if you believe that the spot oil market price will rise and go short if you think it’ll fall.

With us, the profit and loss made on spot oil CFDs is calculated based on the accuracy of your prediction and the overall size of the market movement.

How to trade spot oil

1. Make sure the spot market is how you want to trade oil
2. Understand how oil spot trading works
3. Create your account and log in
4. Pick your spot oil market
5. Set your position size and manage your risk
6. Place your spot oil trade

Make sure the spot market is how you want to trade oil

In addition to trading spot oil markets, you can also trade oil futures and oil options

Understand how oil futures trading works

With us, you can use CFDs to trade on spot oil price movements. Note that CFDs are traded with the contract’s value set at a specified number of dollars (USD) per point or ‘tick’ of the spot oil price.

Create your account and log in

You can trade CFDs to speculate on the rise and fall of the spot oil price on our award-winning platform.¹

You can open a demo account to familiarise yourself with trading spot oil. You’ll get $20,000 in virtual funds to practise your trades in a risk-free environment. When you feel ready to take on the live markets, you can open a live account. You’re not obligated to fund your live account or trade from it unless you’re ready.

Set your position size and manage your risk

Once you’re ready to take your position, go long by clicking ‘buy’ or go short by ticking ‘sell’. Then you can set your position size. Manage your risk by selecting your limit and stop-loss levels in the deal ticket. With us, there are several risk management tools at your disposal such as a normal stop-loss as well as guaranteed and trailing stops.

By selecting a normal stop-loss, you’re giving our platform an instruction to close your position when it reaches a price less favourable than the price at which you opened your position. Note that if slippage occurs, your order won’t be carried out at the specified price.

Guaranteed stops are implemented at the exact price you specify. These stops are similar to basic stops, they differ in that they’ll always be completed at your set level whether rapid price movements or gapping occur.

Trailing stops are set to adapt to market movements automatically by following your position. It works by locking in your gains when the market moves in your favour and by shutting your position if it moves against you.

Place your spot oil trade

Once you’re content with the spot oil size you’d like to trade and your risk management orders, open your trade by clicking on ‘place deal’. You can follow this step by monitoring your position.