Formerly in this article “Strategies for Binary Options Trading” we discussed the new simplistic strategies used in Binary Options trading. In this article we’re going to discuss how you can ascertain if you need to trade in the Forex, Stock, Commodity, or Index markets.
Do Your Due Diligence
Due Diligence is the buzzword for doing your own research. It is essential that you research your target market before starting to trade. In conventional trading you’d examine the historical graphs, financial reviews, SEC filings, economic indicators, and information reports. In Binary Options trading because the normal trading interval is one hour in duration, studying the graphs, reading the news reports, and watching the effects of financial indicators will be adequate in most cases. But many experienced traders can not help themselves continuing to perform more detailed study.
Which Market Is Best?
Selecting what market to trade in is a very tough question. Each market has their advantages and disadvantages. Part of your study into which marketplace to trade is comprehending the make-up of each marketplace. Bear in Mind the Spread strategy that I discussed in “Strategies for Binary Options Trading”? In that example I used two money Assets as the first selection to create a CALL trade as well as an abysmal PUT trade. In reality, you don’t need to produce the CALL trade and the PUT trade at the same Market. For example, the CALL trade could be from the foreign exchange market and the PUT commerce could be in the Stock market.
To Be Able to select that market to trade in let us take a brief look at each of the four markets:
Currency Options Market
The Currency market, also known by the popular name of the Forex market is composed of currency pairs like the relational value of the EUR (The Euro) vs. the USD (U.S. Dollar). There are many currency pairs available for highlow trading. Each broker has their own list which they make available to the public. One of the benefits of the money market is the fact that it doesn’t have any baggage it carries with it in the way of inventory certificates nor is it restricted by many SEC regulations requiring report filings. It’s strictly a relationship between two defined monies. The money markets are greatly influenced by economic indexes and world affairs. Additionally, the cost movements can be extremely erratic and change quickly. Currency markets are available 6 days a week, 24 hours every day. Currency Binary Options are traded between major financial news events.
Index Options Market
The Index markets, like the money markets do not have the burden of certifications and SEC regulations when compared with Stocks market. On the other hand, the Indexes are written of valuations of many Stocks therefore, a major shift in any one stock affects the value of the Index. Indexes generally have more trend lines, but can reverse themselves aggressively after an financial statement or world economic event. Examples of well known Indexes contain: the Dow Jones, Hang Seng, NASDAQ, S&P 500, Bombay 30, IBEX 35, IPC, along with the SSE 180. Index Binary Options are greatest traded after important company announcements for businesses that make up that specific index.
The Stock markets are all based on stock certificates issued by firms. Well know examples are IBM, GOOGLE, Yahoo, and Microsoft. While they’re affected somewhat by economic indexes because of panic selling or buying by investors they’re more influenced by a company’s financial and productivity information. Stock Binary Options are traded immediately after major news and earnings reports regarding that particular firm.
Commodities markets are based on commodities which are agricultural or industrial in their raw and unprocessed state such as gold, silver, aluminum, oil, natural gas, etc.. Commodities are typically traded on the future price of the product. Intraday prices of commodities are inclined to be Moving Sideways within their Trend lines except if there are significant news events about the commodity and about inventory, need, and import report occasions. Binary Options are based on 3 month contracts thus making the best time to exchange Commodities Binary Options in the beginning and midpoint of this futures contract period. Commodities are very sensitive to economic reports in which they are related. For example, a hard freeze report from the citrus growing areas before harvest will influence the futures prices of citrus crops.