Traders & Investors who are looking for a profitable way to earn through online forex trading while keeping a low risk, binary options trading is a good choice. Unlike other financial markets, profits in binary options trading is not dependent on the magnitude of price change. Instead, investors need to only determine the direction the market is going and estimate whether prices can reach a certain level.
In order to profit from binary options trading, it is important for the trader to determine the right asset. At present, binary options brokers offers a variety of stocks, commodities, currencies and indices. According to expert traders, the best way to make money in binary options is to trade when the markets are volatile. It is also important to remember that there are several assets which perform better when the market is range bound. To get the best results in binary options trading, it is important for the trader to evaluate the current state of the chosen market.
What then, are the markets available for binary options trading?
Currency Options Market
This type of market is commonly known as the Forex Market. This can be understood in terms of currency pairs like that of the EUR (euro) versus the USD (U.S. Dollar). By using this option, you can see number of currency pairs which can be used for trading. An advantage on the Currency Options Market is that is that it is unregulated; hence, it is pretty volatile. When it comes to binary option, trading currencies is the best choice during the release of economic news (such as central bank resolutions, etc.).
Commodities Options Market
Commodities markets are based on raw and unprocessed products of industrial and agricultural commodities. These are seen in terms of oil, silver, gold, copper, natural gas and others. These products are traded on their future price. Since the future options takes three months contracts, the best time for Commodities Binary Options is at the beginning and middle part of the contract period.
Index Options Market
Index markets have the same characteristics as the currency market – it is largely traded electronically, hence it is available 24 hours a day. It is also consistently liquid, and because it bundles a number of assets together, it is traded easily compared to stocks and commodities. A word of caution, however: there are some indices which take a long time to respond to show trends, and this is a definite pitfall for an impatient trader. This type of market takes longer trends and it can reverse easily after an economic situation. Since the value of indices relies on a number of stocks, it is best traded after an announcement given by a company covered by the index. Each index reacts differently to these news, hence, it is important for the trader to understand each one.
Stock Options Market
Some of the more popular stocks available from binary options brokers include Yahoo, IBM, GOOGLE, Apple and Microsoft. Although these may be affected by economic signs, they are more influenced by financial productivity news. Just like the index binary options, they are traded best after major news. It also works best when a particular company reports its earnings.