Binary options have enjoyed a growing amount of popularity during recent times. While this is partially due to the increased access provided with the advancement of the Internet, there are other factors to take into account. These “all-or-none” positions are more predictable than other trading systems. Trades can be executed quickly across multiple platforms.
A Look at Binary Options Markets
The individual is aware of the amount to be risked and thanks to low entry levels, even modest positions can be supported. However, another key variable is that such options can be traded in many different sectors. To fully appreciate the flexibility enjoyed, let us take a look at four of the most common areas which are traded.
Binary Options on Forex
The currency trading market known as Forex is the largest single market in the world; trillions of dollars change hands every day. Coincidentally, this is also considered to be the most liquid market. Trades can be opened and closed in a matter of seconds. As the Forex market is global, around-the-clock trading is also possible. Therefore, it only stands to reason that binary traders will frequently enter into this sector. The dual relationship between two disparate currencies is also quite ideal for those wishing to take advantage of small fluctuations.
Binary Options on Stocks
This can perhaps be viewed as the most “traditional” market. Of particular note is that assets across a wide variety of sectors can be chosen. These include (but are not limited to):
- Financial services
Should the trader have a certain amount of expertise in one sector, stocks can prove themselves to be quite lucrative. Not only can a large amount of information be accessed, but it is generally the case that the price of stocks is easier to follow than other assets such as currencies. As these stocks tend to be linked to the performance of an overall industry, more accurate predictions can be made. This can help to minimise the perceived risks involved.
Binary Options on Indices
This is one of the broadest markets to trade in. As each index will contain a massive scope of individual positions, indices can be viewed as providing more stability than opening or closing a trade with a single asset. While fluctuations tend to be much less, such predictability will enable the conservative trader to be in a more comfortable position. Some of these markets will include the CAC 40, the S&P 500 and the FTSE 100. Furthermore, there is a great deal of information available in regards to each market. When this is combined with the fact that the rise or fall of one stock will normally not affect the overall index levels, further security is provided. Considering that 24-hour trades can be opened and closed, this is indeed a popular choice.
Binary Options on Commodities
Commodities have always been considered a “safe” haven for investors during volatile economic times (the rise of gold prices during the recent financial crisis is an example of this principle). However, it can often be difficult for a trader to open up a single position when prices skyrocket. This is an advantage of binary options; entry levels are much lower. The individual is not determining WHERE the price will land, only IF it will rise or fall. Also, traditional traders may be wary of becoming involved in open-market positions when prices are not easy to predict. Commodities positions represent a viable alternative. As this volatility is reduced, the trader can instead place his or her focus upon fundamentals and potential movements as opposed to knee-jerk reactions of the markets themselves. Also, both long- and short-term positions can be enjoyed. This will appeal to risk takers and conservatives alike.
These four sectors are truly massive in their scope and appeal to countless binary traders throughout the world. Of course, many astute investors will open a position in more than one sector; helping to further mitigate the risk of incurring losses if one market plummets. With the correct amount of foresight and through real-time experience, binary options present the very real possibility of enjoying a great deal of profit. As online platforms continue to grow in size and reach, such trades should only become more common.