In these times of extreme competitive retail pricing of refined petroleum products, fuel buyers need to find creative ways of enhancing profit margins. Being willing to take on appropriate cash price movement risk can be a creative profit strategy tool.
When a cash market participant has a very definitive position on future price movements, he would be wise to speculate by unhedging a small percentage of his cash position. The key to success is having a thorough understanding of local market historical pricing.
All successful trader/hedgers have access to local market cash pricing trends. When a proven re-occurring price pattern is discovered, determine what level of risk the firm is able to comfortably accommodate and allow a predetermined percentage of a cash position to ride with the market unhedged.
High probability, low risk trading is essential for giving your firm the competitive edge necessary to prosper in these difficult economic times.
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