Advantages Of Trading Micro Crude Oil Futures

Are you interested to start trading oil futures but would need a way to reduce your risk exposure? If so, micro crude oil futures are exactly what you are looking for. Compared to their standard counterparts, micro crude oil futures make use of a smaller contract to minimize the level of risk you are exposed to. This allows new and inexperienced traders to try out their hand at trading oil futures without being exposed to the full spectrum of risk.

What Are Micro Crude Oil Futures?

When you opt for micro crude oil futures, you are agreeing to purchase the same commodity you would with standard crude oil futures. The underlying asset is crude oil by West Texas Immediate (WTI), the benchmark for American oil. With a standard crude oil contract, it will be identified by the symbol “CL”, while micro crude oil futures are marked as “MCL”. You can think of MCL contract as one-tenth the size of a standard contract as the size of the former is 100 barrels and the latter 1,000 barrels.

Reduced Risk Exposure and Greater Trade Flexibility

What is the maximum percentage of your account’s value you wish to risk in any single trade? With a micro crude oil futures contract, you can minimize potential losses, which can open up a world of possibilities to traders with a lower risk tolerance or smaller capital. Bringing you much closer to your desired level of risk, you are able to customize a smaller contract to suit your risk tolerance, making it an attractive option.

Opens Up New Possibilities

The truth is that the most profitable opportunities in the crude oil market may present themselves over a period of days instead of intraday. As a small futures trader, you will want to retain the ability to swing trade when these opportunities are within reach, but you will need to be able to afford the overnight margin in order to do that. Not every trader wishes to have their capital tied down to the margin of a CL contract, and others may find that it is out of their financial capability. With a micro crude oil futures contract that is one-tenth the size, swing trading may very well be within reach.

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