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Broker that allows long term hold on commodities

  • #1
  • First Post: Aug 15, 2015 8:42pm Aug 15, 2015 8:42pm
I am trying to invest huge money on crude oil and willing to hold for 3 to 5 years if required (will cash out when it reaches over 80).
Do you guys know any broker that may allow long term trading?
I am investing about 100 grand right now then will keep investing 100 grands for each 10$ drop in price. Right now its around 40 and since oil will never be '0', I can simply keep putting 100 grands on 30, 20 and if required at '10'.
  • #2
  • Aug 16, 2015 3:22am Aug 16, 2015 3:22am
good move... i would recommend start at $30 a barrel..

for brokers...i can only think of IG Markets and Dukascopy..

For US Brokers... look at approved brokers by the CBOT

Are you going to use leverage? and by how much?

Best of luck
practising coitus interruptus
  • #3
  • Aug 16, 2015 7:16am Aug 16, 2015 7:16am
Any broker that allows Futures trading will allow you to hold oil futures contracts. I hold commodity futures options for years if need be.

The problem with holding long-term now in oil is the "contango" in the contracts. The deferred contracts (farther-out-months) are more expensive than the front-month contracts so you have to make a decision. Do you keep buying the front-month & keep rolling when expiration approaches or do you buy the deferred contracts & pay the higher price? Right now you'd have to pay about $12/barrel more to buy the deferred contracts about 2 years out. Another choice is to buy an etf (USO) but the performance of this is worse than oil futures because it's not 100% oil futures contracts & there's an expense ratio (less than 1%) that will be deducted each year.

Personally I'd buy December & pay $2.75 premium over September. When that contract gets to expiration, I'd roll to June 2016 and continue to roll every 6 months until you reach your target.

***Actually, I would buy the options on the futures and wouldn't buy the futures at all but if you're not familiar with options that's probably not the best thing to do.

Good Luck.
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  • #4
  • Aug 16, 2015 7:28am Aug 16, 2015 7:28am
Its a directional trade with an unclear timehorizon. I dont think options would be the instrument of choice. Which options would you buy/sell?
  • #5
  • Aug 16, 2015 12:55pm Aug 16, 2015 12:55pm
Quoting shrike
Its a directional trade with an unclear timehorizon. I dont think options would be the instrument of choice. Which options would you buy/sell?
You will have to pay attention to options expiration but futures contracts have expiration also so both have to be rolled if not closed. Using options you can take advantage of the time decay by selling options with part of your position.

I won't get into which ones in particular I'd buy/sell because it probably wouldn't make a lot of sense unless you know about options. I was only suggesting it as another possibility since if would require much less capital to have the same exposure as buying futures contracts.
  • #6
  • Aug 17, 2015 4:29am Aug 17, 2015 4:29am
The problem with commodities is, unless you own the commodities physically (physical gold bullions, physical oil barrels), commodities are not suitable for long-term holdings
Forex is a losers game.
  • #7
  • Aug 17, 2015 4:53am Aug 17, 2015 4:53am
A good call imho. Are you leveraging? Are you gonna hedge these bets or let them out there? If yes, how? IMO holding ETF's will just bring extra costs and all you do is generate fees for the issuer of these instruments. And as previous member stated, performance is poorer.

All the best!

Quoting trader121
The problem with commodities is, unless you own the commodities physically (physical gold bullions, physical oil barrels), commodities are not suitable for long-term holdings
It;s very tough to actually hold crude long-term. You'd have to own huge storage facilities with tanks like those used by states for their strategic reserves - made of salt, sealed, etc. Oil will spoil and can't bury it in your back yard hoping the price will rise.
Best regards, Zef
  • #8
  • Aug 17, 2015 5:41am Aug 17, 2015 5:41am
Quoting epilogue
I am trying to invest huge money on crude oil and willing to hold for 3 to 5 years if required (will cash out when it reaches over 80). Do you guys know any broker that may allow long term trading? I am investing about 100 grand right now then will keep investing 100 grands for each 10$ drop in price. Right now its around 40 and since oil will never be '0', I can simply keep putting 100 grands on 30, 20 and if required at '10'.

hold loss and buy on down under is bad behaviour in this business.
if you really punt on long-term position trade, watch and trade weekly candle of oil, need to see a hammer or bullish engulfing, etc bullish candle on wkly bar.

Another reason, never told about oil slump. China is doing anti-corruption campaign at moment. All big bosses of its three largest oil companies were sacked. Too much corrupted in oil business by Chinese cropers. This impulse was stop now. So, China don't buy oil aggressively, wildly. So, oil is over supply with lower growth of economy. New electric cars are a boom in China recently. Oil may stay below $20 for next decade if it falls below $20.
  • #9
  • Aug 17, 2015 2:15pm Aug 17, 2015 2:15pm
Thanks for everyone's opinion. I think i will go with futures rollover when contract expires. I was thinking there may be better alternative. I guess there isn't.

Its personal opinion. Crude oil is very volatile. It won't stay low for a long time. People used to say the same thing when it was about 30$ a few years back. Also people used to say it will not come below 100. But it does. Policies change, countries change. Oil will never remain at a constant price range. Worst case, I will cash out break even.

Also, I am kind of an investor, not a trader. As such, I look for commodities which are making historical lows and buy long term. Safer than stocks. I have done for Soybean and Corn futures in the past. Trust me, its very profitable and less stressful. 6 years ago, I also used to day trade. I did win some decent money. But it was stressful and I was not very happy.
  • #10
  • Aug 29, 2015 8:48am Aug 29, 2015 8:48am
Quoting epilogue
Thanks for everyone's opinion. I think i will go with futures rollover when contract expires. I was thinking there may be better alternative. I guess there isn't. Its personal opinion. Crude oil is very volatile. It won't stay low for a long time. People used to say the same thing when it was about 30$ a few years back. Also people used to say it will not come below 100. But it does. Policies change, countries change. Oil will never remain at a constant price range. Worst case, I will cash out break even. Also, I am kind of an investor, not a trader....
What broker did you choose to trade futures?
  • #11
  • Jan 7, 2016 3:44am Jan 7, 2016 3:44am
Can anyone recommend a broker where I can micro invest about 1000? Basically buy oil and hold for at least couple of months?
Is IG good enough?
  • #12
  • Last Post: Jan 8, 2016 12:44am Jan 8, 2016 12:44am
If you want to hold OIL, one way or another, you will have to pay. Either by rolling futures or "futures cfds" or by paying swap on cfds if you don't need to roll them.
The short answer is that there is no FREE way to hold OIL at the moment, whatever the method. Even you you took physical delivery, you would have to pay storage or rent a tanker to store it (I'm sure you won't buy enough to fill a tanker, don't worry).

As Srt said, Oil is in contango (reflecting the storage and financing costs). Only in periods of backwardation (the opposite) you can hold oil for free (or even get paid to do so)
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