Back to Help Go long or short oil using Nadex Binary Options
It’s simple to use binary options to trade on the price of oil futures with Nadex.
In this simple tutorial, you’ll learn:
How to turn your predictions into trades
How to open charts showing the price of oil
How to place and manage your trades in the platform
It’s the perfect place to learn more about trading commodities markets on Nadex.
Trading oil with binary options: tutorial video summary
In this video, we’ll show you how to go long or short oil in a limited risk/limited reward way using Nadex Binary Options.
Step 1: log in to your Nadex trading account
Click ‘binary options’ and then ‘commodities’. Under ‘crude oil’ you’ll see the various expirations available. If you’d like slightly longer term exposure to the price of oil, click ‘weekly’. This will show a list of available price levels (or strikes) for the binary options.
Step 2: click on a contract and decide whether to buy or sell
This will populate a chart showing the price of oil, and bring up an order ticket.
You’ll see the contract specifics on your order ticket – essentially it is asking you:
Will crude oil (Jun) finish higher than 41.75 @2:30 p.m. Eastern (at the end of the week)?
If you think yes, you click ‘buy’. The blue shaded area on the chart will show you where oil would have to settle for this long trade to be profitable.
If you think no, you click ‘sell’. The red shaded area will show you where oil would have to settle for this short trade to be profitable.
The expiration and current indicative price of oil are displayed at the top of the order ticket. Your potential maximum profit or loss is clearly shown at the bottom, before you enter a trade (excluding exchange fees).
Step 3: understand the probability of your trade being profitable
When trading binary options on Nadex, the prices you see reflect the implied probability that the prediction you are making will be true, at that moment in time, as priced by the marketplace.
For example, a price of 65 means that:
If you buy, there is approximately a 65% implied probability of the trade being profitable, at that moment in time.
If you sell, there is approximately a 35% implied probability of the trade being profitable, at that moment in time.
Prices, and therefore implied probabilities, will constantly fluctuate as the price of oil changes and expiration moves closer.
Step 4: wait until expiration or close out early
You can choose to close a position early to lock in profits or limit losses. To close a long position, sell it at the current market price. To close a short position, buy it back at the current market price.
And there you have it. You can now leverage Nadex Binary Options to trade the price of oil futures.
Try trading binary options based on oil for free
Download a Nadex demo account. You’ll get $10,000 in virtual funds, so you can practice trading binary options on your terms.
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