For traders who are looking for a good way to earn extra income while at the same time minimizing their risk, binary options is a good choice. Unlike other financial markets, profit in binary trading is not dependent on the magnitude of price change. Instead, investors need only determine the direction the market is going and estimate whether prices can reach a certain level.
Of course, in order to profit in binary trading, it is important for the investor to determine the right asset. At present, binary brokers offers a variety of stocks, commodities, currencies and even indices. According to expert traders, the best binary options market to trade in is the one which is volatile.
Yet, 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 trading, it is important for the trader to evaluate the current state of the chosen market.
What then, are the markets available for binary trading? Here are 4 of them:
1. 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.).
2. 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.
3. Stock Options Market –
Some of the more popular stocks available from binary brokers include Yahoo, IBM, GOOGLE, and Microsoft. Although these may be affected by economic signs, they are more influenced by financial productivity news. Just like the index options, they are traded best after major news. It also works best when a particular company reports its earnings.
4. 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.