Binary Option Assets Explained

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

Binary Option Assets Explained | A Comprehensive Guideline

Binary options are a unique financial trading product where investors can either receive a payout or lose once the option has expired. Since the nature of trading is based on the movement of various assets, you do not buy any of the assets. Instead, you only trade on changes in the assets.

There is a wide range of financial assets that you can trade, depending on your familiarity with the asset. But as different as the assets are from each other, they also offer different levels of risk.

Some are quite volatile, while others come with much lower risks. Hence, investors who have more experience also have an idea of exactly how each of the assets performs at certain times.

Here is a better explanation of some of the most popular Binary Options Assets.

1.Forex Exchange

Commonly known as Forex (FX) it involves trading in currencies. It’s based on values in currency pairs and how they rate against each other. One is usually the base, and the other is quote currency. Just a few of them are considered as major currencies. These are the USD, Pound, Euro, AUD (Australian dollar, and JPY (Japanese Yen).

These currencies are known to have a major significance on the world market interest rates. Some of the considerations of the value of a currency depend on the economic performance and interest rates of the country of the currencies under exchange.

Thus, trading in currency pairs requires you to predict which currency outperforms the other in the pair. The best way to succeed in this type of asset is to conduct proper fundamental analysis so that you can make better predictions.

2.Stock Trading

To raise capital, companies usually issue shares of their enterprises. Now, each stock also represents a share and the more powerful and performing a company is, the more its shares go up in value.

The reason why most investors prefer trading stocks under binary options is because of the less risk they carry, as opposed to alternatives like day trading. Therefore, as a trader, all you need to do is bet on the amount you are willing to lose based on the predictions, and you do not have to buy the stocks at all.

Trading in stocks requires you to have an understanding of the prevailing market trends so that you can make the right choice of stocks. Some of the popular stocks on the market right now include Apple Inc., Vodafone, and Barclays PLC, among others.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

3.Commodities Trading

These are natural products of high value and which include gold, silver, wheat, cotton, and oil. Commodities remain a popular choice of investors because most of them come with lower risks. They are known to exhibit much lower volatility, compared to other assets.

However, their level of fluctuation also depends on the prevailing political and economic environment of the countries of origin of each commodity. For example, energy products can easily be influenced not just by political contexts at home, but also the overall state of the economy.

This can affect the demand and supply factors. Also, for a long time, weather patterns have been known to affect not just agriculture-based commodities but also gas.

In the meantime, such a commodity as oil is usually considered as a safe type of investment which comes with more stability due to demand. It’s one of the assets in the commodity category that performs well, even when the other markets are uncertain. For this reason, most traders who opt for commodities usually sway towards oil as a safety net.

Pricy metals such as gold and silver are also much safer as they are considered to be stores of value. Their prices can easily withstand any kinds of uncertainties; such as economic and political doldrums as compared to other assets. A wise trader can diversify their trading assets include commodities as a way of minimizing risks, and creating a buffer against any substantial losses.

4.Indices Trading

Indices take into consideration an overall group of stocks, instead of individual stocks. This works better because you can diversify more since you are spreading your investment over a more significant number of shares. Another good thing with indices is that if one of the stocks happens to fluctuate, you can rely on other stocks in the index to counterbalance the risks.

It’s quite rare that all stocks face the same fate at the same time. So, this type of asset can easily shield you, in the event of any one of them performing below par. Some of the very popular indexes on the market include NASDAQ, Daw Jones, and FTSE 100.

If you choose to trade on NASDAQ, you need to predict whether those NASDAQ-based companies’ stocks are going up or down. Indices generally represent the performance of a financial market and how it behaves in moments of volatility. Since these indices are based on companies in the same industry, you can easily do your analysis to determine the market trends.

Because of their nature, they also represent a minimal risk, as the peaks and drops are less noticeable. Again, when you compare with commodities, they are not easily affected by political and environmental factors. This allows investors to opt for them as a way of diversifying risks. Indices work exceptionally well for those investors who have experienced. This is because they already have an idea of how specific industries and the market behave at certain times.

Conclusion

The expansive range of binary options assets means that traders have several choices at their disposal, which can help in risk diversification. The knowledge of each of these assets also gives you a good overview of the type of asset that you trade.

Some are quite volatile, while others are not as much. For example, oil is a commodity that is known for consistency, but it can also jump depending on just about any arising factors.

To make that right move, you have to be on the lookout for changes in value. Other than that, most of the assets require you to conduct a proper analysis to make the right predictions.

What Are Binary Options Trading? – Binary Options Explained With Example

Binary Options trading are known for their simplicity and all-or-nothing nature. Moreover, a few reasons are behind to give this trading type name binary option. Options are derivative instruments. It can be traded as forex pairs, cryptos, stocks, indices, commodities, etc.

Furthermore, for traders, it is a lucrative trading type because of it’s quick and high return percentage. But, according to the research, binary traders should pay close attention to the rules of trading before diving with real money.

So, consider this article as a guideline for beginners and hence, we will keep it as simple as possible. Let us start with the binary definition first.

What Is Binary Options Trading?

Abe Cofnas is a thought leader and analyst in the financial industry. We took a line from his book to explain the actual meaning of binary.

“The binary option is called binary because it fits the condition of being either right or wrong-all or nothing.”

On the other hand, the exotic option allows a trader to speculate on the price movements of various instruments. To trade binary option, you don’t need to purchase an underlying asset.

You rather predict whether the price will increase above, or decrease below the strike price or purchase rate. The strike price is the price, at which traders trade underlying assets. Market price must increase or decrease, by the time the trade expires.

The expiry period for binary options is very diverse. The time frame starts from 30 seconds and lasts up to a year. After prediction the price, you will select the call or put option, depending on the asset price movement.

If you guess accurately, you win a payout. But the wrong prediction will give you nothing. It is required to mention that the payout rate differs from asset to asset and broker to broker.

Speaking of assets, there are multiple trading instruments that you can trade as binary options. Before selecting any pair, find some strategies and rules on how to trade binary options .

We will explain all the terms and facts of the binary option below that will give you more knowledge to understand.

Asset Types Revealed And Explained

Binary options trading is all about the movement of various assets. When you trade, you don’t buy any shares or bonds. Instead, you are trading on change. Now there are many different types of commodities, stocks, indices and currencies to choose from, the number available will vary depending on what is offered by your brokers.

When you trade you decide whether or not you think that particular asset will rise or fall in price. You choose the expiry time (let’s say 30 minutes) and then you wait to see if the outcome of your trade is as predicted. Get it right, and you win money, get it wrong, and you lose your original trade amount.

Let’s say for example that the price of gold is rising. Now while it may be trending upwards over a sustained period how do you know that it is going to remain steady for the period that you choose? It is all about studying the markets, selecting a trading type and making your move confidently.

In this guide, you will learn:

    The different asset types available to trade Which of the sectors you should trade in Typical assets within each different category

Take your next step:

The Various Asset Types

When a trader places a binary options trade, they are essentially predicting the movement of that asset. Will it rise or fall in price within a certain amount of time? For some traders, they may have an affinity with a particular market, product or stock. It may be that they have studied the price of gold or silver or that they feel very comfortable with currency pairs (Forex) and how they will react.

The asset types fall into various categories which are commodities, indices, stocks and currencies. You will trade currencies in the form of Forex pairs; how a currency pairing will move against each other. Some brokers have lots of different pairs available to trade on while others have much fewer.

For some brokers, they only offer the most popular assets like gold. There might be as few as 20 while other brokers can provide more than 200. How many assets a broker offers might make the difference in whether or not a trader chooses them.

There are many different types of commodities, stocks, indices and currencies available to trade.

Trading on Currencies

You trade currencies in pairs. You can’t predict the movement of a single currency unless you have another to compare it. So with currency trading, you are trading on a pair. For example, it could be the USD against the CAD or the USD against the GBP.

As you can imagine many different pairings exist, but some are more popular than others. The common currencies are the USD (United States Dollar), the GBP (Pound Sterling) the Euro, AUD (Australian Dollar) and JPY (Japanese Yen). The typical pairings you might see are GBP/EUR, USD/CAD, EUR/NZD etc.

Like other binary options, the idea is to predict the movement of these pairs in a particular direction before the expiry time. In the case of the GBP/EUR, the pound is the base currency, and the Euro is the quote currency.

There are certain political and news factors that can affect currencies performance. Presidential campaigns, general elections and referendums will all have a considerable impact on performance, so it is always essential to ensure that you are trading in a period of stability and not when huge announcements being made.

Trading on Commodities

What are commodities? Well, they are naturally occurring products that are either found in the ground around us, from rocks and mountains to under the sea. These raw materials include precious metals like gold, platinum and silver and light sweet crude oil.

Other commodities include those products that are grown and used in the production of other products. These are grown and harvested in vast volumes across the world and are a huge part of our everyday consumption.

These primary agricultural products include commodities like coffee, sugar, wheat and corn. The list of commodities isn’t exhaustive, and some of them aren’t popular asset types; however gold and oil, in particular, continue to be big assets when it comes to binary options trading.

Trading on Stocks And Indices

There is a difference between trading in stocks and trading in indices. There are many different indices that you can trade on in the binary options arena. These include popular indexes like the NASDAQ, The Dow 30 and the FTSE 100.

When you trade on these indices, you aren’t trading on the movement of individual stocks and shares as you are when trading in stocks, just the performance of the index as a whole. If you decide to trade on the FTSE 100, for example, you are predicting whether you think the value of the FTSE 100 companies will rise or fall in a specific amount of time.

It may be that you know that the top stocks are doing particularly well or a particular sector is doing well. Often these indexes are made up of some companies from the same industry. If you prefer instead to invest your money trading in one particular stock or some stocks, then you can choose stocks as opposed to indices.

If you know your markets and can identify the particular trends, then it may be that you are more suited to trading in stocks and indices than commodities or currencies.

Most traders find that they lean towards a particular asset type and you might see that you have your specific favourite. Some might use the opportunity to make hay while the sun shines when specific factors are affecting the markets. Whatever you choose you should understand the markets you are trading in and know that the markets can change in a short space of time.

Robert has consulted for our website for five years and is a well-established member of the team. While he is passionate about the site, most of Robert’s time is focused on his current position as CEO of a professional coaching company.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

Like this post? Please share to your friends:
Binary Options: How To Start Trading
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: