How to Buy Heating Oil Futures
The futures industry is an exciting arm of the investing world. Futures are designed specifically for trading. Unlike equities, such as stocks or options, futures do not equate to actual ownership in a company or other entity. There are futures contracts for most major commodities and stock indexes. Heating oil is a particular form of energy traded on mercantile exchanges. There are often two versions of commodity futures. One is a large contract traded through live auction on the floor of the exchange. The other is a miniaturized ("e-mini") version of the same contract available to anyone through electronic trading. It is possible for most investors to gain exposure to heating oil futures.
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Instructions
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Find a good futures broker. The industry for futures trading is large and active, with thousands of brokers to choose from. Start with the list of top futures brokers compiled by "Futures Magazine," a leading trade journal in the field.
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Verify that the futures broker you select offers trading in the e-mini heating-oil futures contract. As of January 2010, the ticker symbol for this contract was "QH". Most futures brokers with access to the Chicago Mercantile Exchange will offer the QH contract, but it must be confirmed prior to account application.
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Apply for a trading account with the futures broker.
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Fund the account with appropriate capital to engage in trading.
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Determine the current version of the QH heating oil contract. All futures contracts have expiration dates. The contract that expires soonest is the heating oil variation that most investors trade. It will have expiration symbols at the end of the contract name. For example, "QH.G10.E" signifies the heating oil contract expiring in February of 2010.
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Load the specific QH heating oil contract into the trading platform supplied by the futures broker.
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Buy the heating oil futures contract through the trading platform.
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Tips & Warnings
Futures are highly leveraged investment vehicles that are traded on margin, not cash. This means it is possible to lose more money than you have in your account. Although the profit potential of futures is quite large, so too is the risk. Always carefully study a trading strategy before engaging in futures trading.
