Trading commodities

Trading commodities with binary options

There is no lack of options, when it to comes to binary options trading. For this very reason, a lot of people are now looking towards trading in commodities, using binary options. Given the simplicity they offer to the investors, commodity trading is quickly becoming one of the quickest ways of trading in binary options these days.

While ease of trading is one of the options drawing investors, the lower priced alternatives are yet another feather in the cap, when it comes to investing in commodities. Since commodities are usually priced at a lower rate than their counterparts, they have become a lucrative option for people looking to make some quick bucks, in a simplistic way.

[Read about the basics of Binary options first, in case you want a quick peek before jumping into commodity trading using binary options.]

Commodities available for investing through binary options

  • Coffee

  • Gold

  • Corn

  • Oil

  • Silver

  • Platinum

  • Wheat

  • Sugar

Basics of commodity trading:

When trading in binary options and commodities together, the best part is the simplicity and the ease of access in trading. All you have to do is predict the direction in which the price will go, in order to make a profit. As is the case with binary options, you are already aware of your risk and return, which makes binary options a safe trading tool, as compared to other financial instruments. The price of commodities is quite volatile, due to which the process is rather easier to comprehend. Predict the direction, and accordingly place your trades of the day. If your predictions are right, you earn a reward on your investments.

Traders have to just use two trading options with commodities. If the price of the commodity is increasing, the trader has to use a “call” option and if the value is decreasing, then a “put” option. It all comes down to the art of speculation, basis which the trading in commodities actually takes place. If you speculate incorrectly, and place a “Put” or “Call” and the opposite happens, guess what, you incur a loss. So, while the trading facility seems extremely easy, the art of speculation is a gamble, which needs to be performed efficiently to make a profit.

Trading commodities efficiently

In order to trade successfully in commodities, traders usually prefer to use two methods:

  • Fundamental analysis: The fundamental analysis largely looks at the broader aspects, which are responsible for the movement of price. These factors can include economic conditions, international disturbances etc. However the drawback for such a form of analysis is that it has an impact on the medium and long term binary options, which have a longer expiry date.

  • Technical analysis: Technical analysis involves the use of patterns to gauge the price movements and is often considered to be quite similar to the other financial instruments traded in the market. In order to gauge the prices of short term assets, a combination of technical and fundamental analysis is required, so as to make sure the price movement is correctly predicted.

Conclusion

The idea and concept of commodity trading using binary options is relatively easier, since there are only two options to choose from. No complicated “stop” procedures, no heavy investments and all you have to do is figure out the direction of the price, to end up with a sizeable return on your investments.

Photo credit: christiaan_008 via Visual Hunt / CC BY-SA

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