The calculation of required margin for Crude Oil CFD is performed as follows:
Margin: Trade size in micro units × Ask price × Margin required
* A unit is expressed in US$
* Margin calculation of Crude Oil CFDs has nothing to do with the leverage setting in your account
Take XTIUSD as an example:
The basic platform settings for XTIUSD imply that the contract volume of 1 standard lot is 1000 (1000 barrel) and the required margin is 1%.
Assuming that the current XAUUSD price is 25.88 / 25.85, the required margin for buying 1 lot of XTIUSD would be: 1000 × 25.85 × 0.01 = 258.5 US$
The formula for calculating the profit and loss of a Crude Oil CFD is:
P&L = Number of lots × Contract size (trade size in micro-lots) × Pip movement
Units are expressed in USD
Pip movement of the BUY orders = Ask price at closing time — Bid price at opening time
Pip movement of the SELL orders = Ask price at opening time — Bid price at the time of closing a position
Let's take XTIUSD as an example:
Assume that the platform's current XTIUSD quote is 25.88 / 25.85. Lilly buys 1 lot of XTIUSD, and Tony is going to sell 1 lot of the same asset.
One week later the exchange rate of XTIUSD escalated to 23.79 / 23.75. So at this time profit and loss of our investors is:
Lilly's P&L = 1 × 1000 × (23.75 - 25.88) = -2130 USD
Tony's P&L = 1 × 1000 × (25.85 - 23.79) = 2060 USD
Spot price of oil is the current price of oil - that is the price that you can buy or sell oil 'on the spot' (ie: Now). Spot price of oil (or other commodities) is also a ‘measure’ of the current demand and supply of oil at the moment.
The future price of oil (or other commodities) is the price 'in the future' (or x days from now) that you can buy oil - either by futures or forward contract.
From the trader's perspective, the main differences are:
1. Swap charges are different. There is no overnight spread for crude oil futures, while an overnight spread for crude oil is charged.
2. Rollover costs also differ. Futures oil has a monthly rollover and there is an automatically added rollover fee. Spot crude oil does not need rollover, and so it comes with no fees of that type.
3. Trading hours are not the same either.
While both Brent and WTI crude oil are popular instruments for trading, there are five key differences between the two oils:
Extraction location: WTI crude oil is extracted and produced in the US - mainly in Texas, North Dakota and Louisiana. Meanwhile, Brent crude is largely extracted from the oil fields in the North Sea.
Geopolitical difference: Oil prices are often influenced by political activity, which can mean the political situation in the areas where oil is extracted can influence prices and oil trading activity. Today, this is more relevant for OPEC oil than Brent or WTI.
Composition and content: Oil composition also influences the price of WTI and Brent, mainly API (American Petroleum Institute) gravity, which is a measure of how heavy the oil is compared with water, and sulfur content. WTI's sulfur content is 0.24%, versus Brent's 0.37%
Oil trading options: Brent and WTI also have different trading options, including futures contracts and CFDs. Futures contracts for each oil are managed on different exchanges (WTI via the New York Mercantile Exchange and Brent via the Intercontinental Exchange), while many CFD brokers will offer the option to trade both via the same broker and platform.
Prices: Theoretically, WTI should trade at a premium to Brent crude, however, this isn't always the case. The reason for this is because there are a range of factors that influence the price of oil, not just the quality of the oil itself. One is supply and demand, for example, when supply increased during the Shale Revolution in the early 2000s, the price of oil went down.
Swap fees of different instruments are different
View trading hours of all instruments and holiday arragement of the platform
The spread are floating, apply for Raw Spread Account to get the best trading environment
Rollover is a cost which designs to compensate the prices changes when extend the trading contract to the new one