Tag Archive for binary options

What type of asset should I trade?

If we take the two most popular financial trading methods amongst hobby traders, Binary options and Forex trading, there are two things that set them apart. First of all, they are two different types of trading in general, but I’m sure you knew that. Forex trading lets the investors buy an asset then exchange it at any time, preferably when it has increased in value so that the investor will make a profit. In binary trading the investor will “bet” on an asset to either gain or lose value within a timeframe that is specified before the bet is placed. He then gets rewarded if he’s right, but loses his full investment in case he is wrong. This means that in Forex trading, the investor can cut losses by selling an asset when it starts to fall on the market, which is something binary options can’t offer. On the other hand, binary option trading offers much higher rewards in a quicker time thanks to the large payouts that comes with a successful investment.

The other thing that sets the two apart, is the types of assets the two trading forms has to offer. Forex trading, as the name suggests, is mainly focused on trading currencies on the foreign exchange market, such as EUR, GBP, AUD, USD, JPY and NZD, although some Forex brokers do offers a slightly broader range of assets, including commodities such as GOLD or OIL. Binary options, on the other hand, have the advantage of letting the investor choose between a wide range of different assets. You can find a good site listing a large selection of binary assets on this link. This is because the trader doesn’t actually buy anything when he invests in an option. He simply puts money on the outcome on a specific event, much like a punter will put money on the result of a football match. Because of this, binary option traders can choose to invest on many different assets on the Currency market as well as the Stock-, Indices- and Commodities-markets, which is a really big advantage, especially for the experienced trader who trades on different markets.

So what sort of asset is the easiest to trade? Well, the answer is quite simple. You should only trade the assets that you know something about; otherwise you’re pretty much gambling with your money. If you get in to the binary options market with a background in forex trading, you will have a good chance of being successful when you trade currency pairs. On the other hand, if you, for example, work in a financial environment that involves the stock market, then you should have a pretty good idea on how to predict the future trends of certain stocks that you overview on a daily basis. This being said, I don’t mean that you should limit yourself to just one asset! You should always try to be broadening your horizon, and as you learn new things (which you can do on this website!) while trading, you will gain new knowledge which you can use to your advantage.