Over-the- counter binary options trading was first available to the public through the American Stock Exchange in 2008. Binary options trading has the potential to gain a quick profit for the novice as well as seasoned binary options trader from the market quickly, with reduced risk, in the short term. Binary options trading is still risky but it offers greater success for novices due to its more flexible, predictable, and controllable nature. The asset’s prices is not influenced on the ultimate payout.
There are four primary internationally-traded binary options asset categories available to the binary options trader at cedarfinance. Each binary options asset market and class is distinct and attracts its own investor type. Regardless of asset class, the options trader should remember that demand moves the market up. When supply needs are not met, the markets falls. As with all investments and investing, the best asset a binary options trader can have is an extensive understanding of their chosen platform(s).
1. Stocks. Stocks are traded on the equity market. These “fixed return options” assets are ones most novice traders are familiar with. Almost every binary options broker provides these options and for the novice they are considered a good platform with which to begin. The instant real-time availability of stock as well as bond prices online helps the novice trader get up and running and making money quickly. Binary options traders do not invest in stock shares. Rather, they predict how well the particular stock will perform within a determined time frame. The trader controls the process. They pick the asset, place the investment, and designate the expiry.
2. Currencies. Forex (foreign exchange market), one of the largest global financial markets, establishes exchange rates between countries. Forex is where currencies are traded.
A binary options broker’s currency platform offers a variety of options to the options trader, although the most focused and commonly traded markets are the U.S. dollar and Canadian dollar, the Euro, the British pound sterling, the Japanese yen, the Swiss Franc, the Australian dollar, and the New Zealand dollar.
The binary options trader does not purchase currency. Rather they select any two currencies. Currencies are selected in pairs – one to be bought and one to be sold. Typically one of the currencies is the U.S. dollar. The performance of their exchange rates is predicted. The options trader places the investment and designates the expiry. Typically, a major portion of the currency trading takes place between central and commercial banks and large companies. Global politics, economies, and natural disasters make accurate predictions difficult.
3. Commodities. Commodities binary options trading can be the most rewarding, or reap the greatest losses, primarily because the commodities asset class is the most volatile. The binary options trader chooses to invest in any of many raw materials markets that include metals, such as silver and gold, copper and platinum, oil and gas, and electrical and grains. Similar to other asset classes, the binary options trader chooses the option, predicts the outcome, places the investment and expiry, and tracks the commodity’s progress through the day. Commodities options trading requires the trader have a clear understanding of all factors that influence their selected commodity. Due diligence and extensive research everything from labor and political unrest to weather conditions must be considered prior to placing the predicted trade. Only informed trades reap profits.
4. Market Index or Indices. Index markets include the Dow, NASDAQ, S&P 500 and NASDAQ 100 Future. The best binary options trades are made in any of these when the market is rapidly moving. Each index opens and closes at set times. When the closing bell rings, trading is done for the day. The options trader predicts the index rise or fall, gain or loss, before the closing bell. The options trader must consider the average financial performances of stocks within each index and factors that affect overall movement, such as:
- Global economy,
- GDP,
- Political unrest and terrorist activities,
- Manufacturing and labor, unemployment, recession, and
- Consumer supply and demand.
Most options brokers offer options builders that allows the options trader to customize the program to better determine an index movement in accordance with external factors. The options trader must keep current on global and local news, reports, and current trends, as well as the indices past performances under normal, extreme, and similar conditions.