online/offshore broker help needed - plus ETF advice

[Firestarter]

Hello,

I'm very new to trading and have been reading up as much as I can on the forum which looks great. However, I have a feeling I've hit information overload so thought am asking for help.

With the oil prices currently as low as they are, I was looking at investing in an Oil ETF, and USO keeps springing to mind.

Which online/offshore broker would you recommend (was looking at Internaxx)?

Secondly, is an oil ETF a good idea, and is USO the best there is?
Am i right in thinking with an etf the price will just vary as the market does, so as the market price of crude rises, so will my money?

Thanks

 

[terry-shep]

Hello,

I'm very new to trading and have been reading up as much as I can on the forum which looks great. However, I have a feeling I've hit information overload so thought am asking for help.

With the oil prices currently as low as they are, I was looking at investing in an Oil ETF, and USO keeps springing to mind.

Which online/offshore broker would you recommend (was looking at Internaxx)?

Secondly, is an oil ETF a good idea, and is USO the best there is?
Am i right in thinking with an etf the price will just vary as the market does, so as the market price of crude rises, so will my money?



Thanks

Wouldn't you be better off trading crude futures, either US or Brent, on an MT4 broker who offers these instruments, like FXPro? Or on IGIndex, or ODLmarkets, you can spreadbet, which is more or less what you mention, gaining on the price movement (or losing!)

On FXPro the spread is reasonable, usually only 2 pips or even 1.5 sometimes. Spreadbetting oil, the spread is usually 5 or 6 pips, so it isn't really suitable for a scalper. Fortunately, oil tends to run quite decently when it moves so it absorbs the spread pretty well.

If you are new to this and particularly to oil trading, I recommend you to sign up for a demo account on FXPro and run your ideas past the market to see how you get on. Please don't use money for at least three months.

Good luck anyway.

 

[si1503]

Hello,

I'm very new to trading and have been reading up as much as I can on the forum which looks great. However, I have a feeling I've hit information overload so thought am asking for help.

With the oil prices currently as low as they are, I was looking at investing in an Oil ETF, and USO keeps springing to mind.

Which online/offshore broker would you recommend (was looking at Internaxx)?

Secondly, is an oil ETF a good idea, and is USO the best there is?
Am i right in thinking with an etf the price will just vary as the market does, so as the market price of crude rises, so will my money?

Thanks

2 questions...

Who says the price of oil is low right now?

Why is the price of oil going to go up in the future?

 

[Firestarter]

Well below $70 it can be argued that some of the oil fields outside OPEC may have to be shut.

With OPEC meeting soon, a cut in production is very likely to ensure supply meets demand or even to cut a bit further. Surely the effect of that would be a rise in prices?

 

[si1503]

Well below $70 it can be argued that some of the oil fields outside OPEC may have to be shut.

With OPEC meeting soon, a cut in production is very likely to ensure supply meets demand or even to cut a bit further. Surely the effect of that would be a rise in prices?

This information is already in the price, buy the rumor sell the news as they say. If this was sufficent to drive up prices it already would have done, but it has not. Oil for now, in my opinion, is going lower.

Supply is still outstripping demand, demand will keep on falling for now due to the global recession, and also due to less reliance on oil from developed economies, and the shift to low carbon alternatives. So demand = bearish. On the supply side there is talk of further cuts, but this is not sufficient to change the direction of the price in oil... this is more to cushion the fall as I see it. And think deeply about this... we are talking production cuts, not supply cuts in the sense of oil running out, which is one of the big fundamental bull drivers for this whole commodity supercycle talk (rubbish). The true result of the production cuts is there is more oil in the ground for later on, to me cutting supply for now means it will be longer before we run out of oil.

And the icing on the cake in this market for me, is if oil did somehow manage to start going higher, the pressure from the US/UK governments on OPEC to increase the supply again so to depress the price would be immense, as I do not see the economy turning around unless we have a lower oil price, and when I say lower I am talking closer toward the 10$ per barrel mark.

A lot of people will be looking at oil right now and thinking lets buy buy buy and sell it when it is over 100$, but you could be waiting a very long time, and if you are dealing this on margin it could be a very painful wait.

 

[Firestarter]

Never really looked at it that way. Thanks for that.

One question, why are so many analysts predicting Oil hitting $70 by the end of the year?

 

[si1503]

Because they are not very smart is the short answer.

The credible analysts at the moment are forecasting oil lower. I have worked in investment banking and it is quite shocking how far off predictions from many supposed experts are, I just think many of them over analyse the effects of small and mostly irrelevant fundamental shifts on price momentum and direction... and underestimate the bigger fundamental drivers and underlying momentum and sentiment. At the bank I was with the guys making the best calls were the technical analysts, and I went in with no bias to FA/TA at all... but these guys nailed it in there reports day on day, they were saying oil lower back in the summer of last year, whilst even our commodities chief strategist was talking how oil should stay above 100$ and then move higher again at the end of the year, he couldn't have got it more wrong.

At the end of the day we are all just guessing what will happen, no one really knows, the above is just my opinion, I have been day trading oil now for about 9 months and am making a healthy living from it, unlike an analyst I put my money where my mouth is.

At some stage oil will bottom and start going higher, IMO this will happen hand in hand with an economic recovery, but that is very distant on the horizon at the moment, the global economy is in a big mess, it will take a while.

 

[terry-shep]

Because they are not very smart is the short answer.

The credible analysts at the moment are forecasting oil lower. I have worked in investment banking and it is quite shocking how far off predictions from many supposed experts are, I just think many of them over analyse the effects of small and mostly irrelevant fundamental shifts on price momentum and direction... and underestimate the bigger fundamental drivers and underlying momentum and sentiment. At the bank I was with the guys making the best calls were the technical analysts, and I went in with no bias to FA/TA at all... but these guys nailed it in there reports day on day, they were saying oil lower back in the summer of last year, whilst even our commodities chief strategist was talking how oil should stay above 100$ and then move higher again at the end of the year, he couldn't have got it more wrong.

At the end of the day we are all just guessing what will happen, no one really knows, the above is just my opinion, I have been day trading oil now for about 9 months and am making a healthy living from it, unlike an analyst I put my money where my mouth is.

At some stage oil will bottom and start going higher, IMO this will happen hand in hand with an economic recovery, but that is very distant on the horizon at the moment, the global economy is in a big mess, it will take a while.

No surprise to anyone these days that analysts in banking houses can get their sums wrong, we have abundant evidence of it.

It doesn't take a financial genius to understand that oil is linked to world production and is going to bump along the bottom until the economies want to use it again. When that process starts there'll be a fine bull market on lots of instruments and oil will be at the forefront.

 

[Firestarter]

Thanks for the advice

Its certainly making me re-evaluate my thoughts. II'd banked on buying at around $40 and selling in 6 months time at $70, but based on what's being said, that seems unlikely.