Oil trading as inescapable. Even if you are trying to stay away from it sooner or later you are going to come around. Plus, news about oil trading is everywhere. That you are for sure not going to be able to escape. Ever. So, that leads me to think that sooner or later all of us are going to at least try trading oil. And when that happens it is better to be prepared for the hidden dangers of oil trading.

1. Too many cooks.

Sometimes the fact that there are a lot of countries that produce oil and form the price for the commodity seems good. But it is pretty deceiving. Too many cooks mean too much interest and too many opinions crossing with each other. And that earns that there is bound to be conflict of interest. Look at OPEC and Russia. These two have been battling for and against high output numbers since the dawn of times. And every wave of the battle is reflected in the prices for oil. And we are the ones who suffer from it.

2. Too much trust.

I would argue that we out too much trust in the asset. It seems that we always hope that sooner or later we are going to see prices for it skyrocket even if we see the contrary. Why is that? Well, because it has been around for so long that we are hoping that it is going to live up to expectation as one of the oldest assets in the markets. But does it?

No, no it doesn’t. It seems that in the modern world oil is that assets that is prone to shakes and changes as the world around it shakes as well.

So, should we trust in oil? I would but with caution.

3. It attracts wars.

Have you noticed that oil always attracts wars? Of course, resources are limited and sooner or later it is going to start running out. And the more oil the country owns – the longer its power is going to hold. And that is the main source of conflict around it. What bad does it do to us?

Well, imagine that a country trades oil. And then we see a forceful change of power in it or just an armed conflict with a neighboring country. The trade stops and the price for the oil in the world change rapidly. That is what the global effect for it is. And as a result we as traders, once again, left suffering.

4. It seems to obvious.

The main HIDDEN danger of oil is the fact that it seems too see-through. We think that we know everything there is to know about it when it goes and shows us uneven or unlikely performance. That happens more often than we would care for.

Never think that you have seen everything. The minute that thought comes to your mind oil is going to prove you wrong. And that is the most dangerous thing about it.