What Assets You Can Trade in Binary Options
An asset can be any commodity, stock, currency or index. In binary options trading, you are investing and trading on the movement of certain assets. You do not have to actually buy any of these assets to trade in this market, but it is important that you have every bit of information about them. This is because the success of your financial betting and trades will be based on how good you are at predicting the movement of those assets.
Forex Currency Pairs:
Forex currency pairs is the most popular type of asset offered in binary options trading, in fact, forex market is the world’s largest financial market according to trade volume ratio. It basically involves trading of the currency around the world. Traders invest on the exchange rates of currency pairs such as USD/EUR, AUD/USD, EUR/GBP, EUR/JPY and many more.
Values of currencies vary in different countries due to their exchange rates and other factors including the politics and economy of the country. These factors make it easier to predict the future exchange rates of currency pairs. Moreover, if you know when the central bank of a country will print money you can easily predict the future exchange rate of their currency. Few of the major recognized currencies are US Dollar, British Pound, Japanese Yen, Euro and Swiss Franc.
After currency pairs, stocks are the most important asset types in binary options market. A stock represents a share in a company which can further be traded. Companies issue these stocks in order to raise capital. Difficulty index of this asset is low because predicting the future movements of major and popular companies is generally easy. If the company is performing well then the value of its shares will go up. If it is performing badly, the shares go down. Similarly, if a major company like Apple announces new product launch, then you can be sure that its stock prices will increase in the future.
Major companies with famous stocks include Microsoft, Amazon, Google, AT&T and many more local and international companies.
Binary options market allows you to trade on indices such as FTSE-100, DAX-30, Dow Jones, Nasdaq Composite, IBEX-35 and much more. Indices are more stable and have less obvious fluctuations because they are based on groups of stocks rather than individual stocks.
Due to these small fluctuations in the value of indices, it becomes a little difficult to predict the future movements. Due to their stability, environmental and political factors also do not affect this asset.
Commodities are the real goods such as gold, cotton, rice and wheat. The prices of these goods are affected by political, environmental and economic conditions and therefore the movements can be traced very easily. The prices are almost always going up in certain time frames and hence this makes it extremely easy to trade with these commodities. It is the easiest but highly underrated asset type in binary trading.
This asset type is not very common in the market but some binary options brokers allow you to trade on the outcome of certain events. According to many traders however, this is more of a form of sports betting than investment in financial trading. This might be a reason that many brokers are still not ready to accept this form of investment. Few examples of events can be National Elections, Oscar Awards and many more.