Binary Options Commodity Trading
The basics of binary options trading are fairly simple – with you betting on the way an underlying asset such as gold, currencies or stocks are going to move. Commodity binary options have the same goals – expire above or below the purchasing price in a fixed amount of time. Binary options are a good way for new traders to start with, and investors who wish to engage in commodity trading should at least have some knowledge on fundamental and technical analysis. This will help them make informed decisions.
Some of the commodities available for trade in the binary options market will include the likes of oil, gold, coffee, corn, silver, sugar and others. Trading commodities is similar to trading any other assets on a binary options platform, and the index value of most commodities is set in U.S dollars because they are traded mostly with that currency.
Commodity Trading – A Popular Investment Product
The commodity market is one of the biggest in the world with a share of about one third of all international trade. Commodities are a popular investment product and gold, silver and oil can be traded with all the big binary option brokers online. The price of commodities is sometimes volatile which exposes you to losses.
As with traditional investment markets, there are pros and cons with trading in certain financial vehicles, and this is true for commodities as well.
To place a trade with a broker, select your commodity and analyse its price action. If you see that gold for example, has some downside pressure, you may elect to purchase a put, and if you believed gold was set to rise, you would buy a call.
Commodity Trading – Fundamental or Technical Forms of Analysis
Trading commodities with binary options can be profitable speculating on price movements in these markets. Traders use 2 techniques to analyse commodity price movements – fundamental or technical forms of analysis. Technical analysis applies the same principles of chart pattern recognition as other financial markets.
Commodity markets are sensitive to events which can be seen using fundamental analysis. Fundamental analysts look at larger factors driving price which affect the value of commodities such as global political and economic tensions.
Trading mostly with commodities is good for beginner investors, and specializing in a few assets can help traders feel more comfortable in the binary options arena and help traders try out different investment strategies and techniques. Once a trader is good at trading one or two assets, the next step is to diversify one’s trades and benefit from different types of assets.
No Margin with Binary Options Commodity Trading
Commodities face some risks that other investments don’t. For a new trader interested in commodities, binary options are the way to go. High margin requirements limit what sort of commodities you can trade, and most new traders don’t have lots of capital available. This closes the door to commodity trading in the traditional sense, whereas binary options requires no margin.
Binary options trading is an excellent investment opportunity for for new traders, and more so those traders who don’t have big accounts. Commodities are more volatile than stocks which requires that you at least have knowledge in technical analysis, because binary options commodity trading can then be lucrative.