Which markets can be traded with binary options?
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[sc:BDSwissRBanner]At binary options are derivatives that reflect the value of a specific financial product or asset. This means that that they merely replicate the price trend. The Purchase of binary options The price of the underlying instrument is therefore not affected by a change in the value of the underlying instrument.
Retailers who have already participated in the Stock exchange active traders will find binary options a welcome alternative to regular trading. Instead of determining the price target, loss limit and exit, traders can simply make a forecast of the price development within a certain time frame. This simplification can sometimes lead to some psychological factors switched off, which represent a risk for the trader. However, not all assets can be traded as binary options.
Which underlying assets can be traded?
On which underlying value a binary option is available depends on the respective broker. When trading binary options, the only trading partner is the broker itself. The broker sets the prices and is also the contractual partner for the binary option. If a trader is successful, the broker loses a profit. However, he earns from every option purchased, as he also earns from the spread, i.e. the price difference.
Most of the brokers we tested offer the following underlyings as binary options to:
- Shares
- Indices
- Currencies
- Raw materials
Each asset offers its own advantages and is suitable for different trading approaches.
The trading times of the different underlyings
Not everyone Underlying can be traded at any time. While there are certain trading times for most underlying assets, there are also certain times when trading is most popular. The trading volume is an important factor for successful trading, as a high volume is usually associated with high volatility. Traders should therefore pay attention to the main trading times when the greatest volatility prevails.
Shares are the most traded underlying assets of binary options. The Trade Investing in shares is recommended for most beginners, as they are usually liquid and it is generally easier to make a forecast for a share than for a currency, for example. The reason for this is the wealth of information available on an individual security. For most shares, the necessary information is available free of charge. Based on the annual reports and balance sheets, traders can Fundamental analyses and get an idea of the future development of the share price. Fundamental analysis is the reason why many beginners are advised to start with shares first. Principles of the market and the stock exchange fast be learnt.[sc:bo_vg_banner]
Beginners are advised to start by taking a long-term view. In most cases, it is easier to find a Long-term forecast over a price. For traders with this trading approach, it makes no difference what time of day they trade. You should nevertheless ensure that binary options on shares can only be acquired during regular trading hours. The stock exchange on which the share is listed is decisive for this.
If this is a Sharewhich is listed on the German DAX, the trading hours of the Frankfurt Stock Exchange are decisive. This trades from 09:00 - 17:00 on weekdays. The main trading hours are particularly interesting for short-term traders. This is when traders find the largest volume and, accordingly, the Highest volatility. The first main trading time is from 09:00 - 11:00. This is when the exchange opens and all orders placed outside opening hours are booked. The second main trading time is between 14:00 and 17:00. At this time, the New York Stock Exchange opens while the Frankfurt Stock Exchange closes. It is the only period when both exchanges are open. Due to the strong market movements that take place during this period, short-term traders have increased opportunities to position themselves profitably in the market.
Trading hours for commodities and foreign exchange
While shares can only be purchased at fixed times, other options are available for currencies and commodities. Many Commodities and currencies are not traded on regular stock exchanges, but are bought and sold within banking networks. The brokers are connected to these liquidity networks, which can be compared with a stock exchange.
However, the trading hours are different to those of the regular stock exchanges. As a rule, both commodities and foreign exchange can be traded 24 hours a day. However, trading in foreign exchange is suspended at the weekend. The main trading hours for short-term traders are the same, at least for the EUR/USD currency pair. For other Currency pairs different main trading hours apply, which depend on the opening hours of the respective exchanges and the overlap of the opening hours of the exchange of the other currency.
Which underlying should you start with?
Decisive for the choice of a Underlying are the own Previous knowledge or expertise in that particular asset. It is important that traders are able to track certain assets over a long period of time, without losing interest. It takes a certain passion for an asset to be able to deal with it in the long term. Following the news and market developments must be accompanied by a positive feeling. If you don't have a passion for your Underlying will hardly be able to act successfully in the long term.
Anyone who has not yet been able to establish a relationship with any of the underlying assets, should start with shares. Due to the large amount of free information available, it is easiest to make a forecast with this base value. Even easier would be the Equity indices as these fully reflect the market and are therefore even easier to trade. A binary option that tracks a stock index, is more likely to be successful, as the information is the easiest to obtain.
Pay attention to the selection of underlying assets when choosing a broker
If you are already familiar with the Stock exchange trading and with a specific product class Review When switching to binary options trading, you should make sure that the broker also offers this trading class. If a broker states that it issues options with shares as underlyings, make sure that the specific share is included. The same applies to foreign exchange traders who hope that switching to binary options will make trading easier. Although for most Brokers the majors such as EUR/USD, USD/JPY, GBP/EUR etc. are available, it is worth taking a look at the list. Research can pay off here. With regard to bonds, very few brokers have presented a comprehensive range to date. The Broker BDSwiss is one of the brokers with the largest selection and is therefore our test winner. [sc:bo_testsieger_promobox]
Simone Aescher is the founder and operator of the successful crypto blog aescher-ai.ch.
After studying business administration at the Frankfurt School of Finance, she gained over 5 years of professional experience in the financial sector. However, her passion has always been the financial markets and investments.
In 2019, Simone Aescher finally turned her hobby into a career and founded her blog. She shares her in-depth knowledge of shares, ETFs, cryptocurrencies and much more.
As an active trader, Simone is constantly testing new brokers, robo advisors and trading apps. With her honest product reviews, she helps her readers to separate the wheat from the chaff.
With her academic background, many years of experience and practical expertise as an investor, Simone Aescher combines the ideal prerequisites for competently analysing and evaluating the financial markets.