Trading Commodities with Binary Options

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In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

Outside the EU, financial products are offered by Binary (SVG) LLC, Hinds Building, Kingstown, St. Vincent and the Grenadines; Binary (V) Ltd, Govant Building, Port Vila, PO Box 1276, Vanuatu, regulated by the Vanuatu Financial Services Commission (view licence); Binary (BVI) Ltd, Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands, regulated by the British Virgin Islands Financial Services Commission (licence no. SIBA/L/18/1114); and Binary (FX) Ltd., Lot No. F16, First Floor, Paragon Labuan, Jalan Tun Mustapha, 87000 Labuan, Malaysia, regulated by the Labuan Financial Services Authority to carry on a money-broking business (licence no. MB/18/0024).

This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, Japan, or to persons under age 18.

The products offered via this website include binary options, contracts for difference (“CFDs”) and other complex derivatives. Trading binary options may not be suitable for everyone. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, the products offered on this website may not be suitable for all investors because of the risk of losing all of your invested capital. You should never invest money that you cannot afford to lose, and never trade with borrowed money. Before trading in the complex products offered, please be sure to understand the risks involved and learn about Responsible Trading.

In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, licensed and regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

In the Isle of Man and the UK, Synthetic Indices are offered by Binary (IOM) Ltd., First Floor, Millennium House, Victoria Road, Douglas, IM2 4RW, Isle of Man, British Isles; licensed and regulated respectively by (1) the Gambling Supervision Commission in the Isle of Man (current licence issued on 31 August 2020) and by (2) the Gambling Commission in the UK (licence reference no: 39172).

In the rest of the EU, Synthetic Indices are offered by Binary (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta; licensed and regulated by (1) the Malta Gaming Authority in Malta (licence no. MGA/B2C/102/2000 issued on 01 August 2020), for UK clients by (2) the UK Gambling Commission (licence reference no: 39495), and for Irish clients by (3) the Revenue Commissioners in Ireland (Remote Bookmaker’s Licence no. 1010285 issued on 1 July 2020). View complete Regulatory Information.

Binary.com is an award-winning online trading provider that helps its clients to trade on financial markets through binary options and CFDs. Trading binary options and CFDs on Synthetic Indices is classified as a gambling activity. Remember that gambling can be addictive – please play responsibly. Learn more about Responsible Trading. Some products are not available in all countries. This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, or to persons under age 18.

Trading binary options may not be suitable for everyone, so please ensure that you fully understand the risks involved. Your losses can exceed your initial deposit and you do not own or have any interest in the underlying asset.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.6% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Trading Commodities

You will learn about the following concepts

  • Introduction to commodities trading
  • Types of commodities: agricultural, energy, metals
  • Trading gold, silver and crude oil

Introduction

Trading commodities is quite popular among binary traders, because it gives them the chance to trade with a wide range of commodities which can be categorized in 4 categories:

  • Agricultural (soybeans, wheat, cocoa, coffee, sugar, coffee, rice, etc.)
  • Energy (crude oil, natural gas, gasoline, etc.)
  • Metals (silver, platinum, gold, etc.)
  • Livestock & Meat (lean hogs, live cattle, pork bellies, etc.)

Of course, there are many other types of commodities that are available on the markets. It is up to every trader to decide which commodities will best fit their trading strategy or style – for example, some commodities are a better choice for traders who rely on call/put options, while other commodities are a more reasonable choice for touch/no touch options.

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Commodities in Details

One of the main reasons why so many binary traders are attracted to commodities is the fact that there is plenty of information about these types of assets on the web. You can quickly find detailed technical analysis reports, as well as the latest news regarding specific commodities. However, these assets can cause you a lot of trouble as well. One of the major setbacks of trading commodities is the fact that these assets are often affected by factors which are impossible to predict. The value of these assets may quickly decline or increase in case of unexpected events such as bad weather conditions, natural disasters, epidemics and even man-made mistakes.

If you are familiar with basic economic principles, then you probably know that they apply for commodity markets as well. If for any reason a commodity’s supply declines, then it is almost certain that its price will drastically increase. It is true that investors often wait for epidemics or major natural disasters that make market prices more volatile – if you wait for the right moment, these events can work in your favor, but they can also cost you a lot of money if they occur unexpectedly.

What We Will Talk About

In our tutorial we shall cover the following commodities – Gold, Silver and Crude Oil. You will receive valuable information about each one of these assets, as well as tips on how to be more precise in your predictions, that concern one of these commodities. You will also learn about the factors, which have the biggest impact on the value of Gold, Silver and Crude Oil, as well as how to predict sudden market changes.

Trading Commodities using Binary Options

By trading binary options using commodities as their underlying assets, you have the exciting opportunity to speculate on products such as oil, gold, silver and copper, etc. There are many advantages to trade commodities using binary options as opposed to doing so directly. For example, when you trade commodities directly, you have to evaluate the magnitude of their price movements. In contrast, using commodity options is simpler because you just need to focus on determining in which direction price will advance without worrying about the size of the movement.

However, despite this attractive simplification you must still adopt caution because commodity trading involves much higher levels of volatility compared to other asset types, such as stocks and currencies. For example, the oscillations of gold prices can exceed twenty times the size of the equivalent ones of the EURUSD currency pair generated within the same time-period. This attribute presents you with a great potential for large profits but with a significantly increased risk exposure.

Consequently, the key to success when trading commodities using binary options still depends on careful analysis and research. For example, if you are assured that the price of gold will rise constantly over the next few months then you could confidently open a ‘call’ binary option using gold as the underlying asset. Similarly, if you deduce that a new surge in the global production of industrial and electrical products is imminent involving a large increase in the usage of electrical copper wiring, then you should activate a ‘call’ binary option utilizing this metal as the underlying asset.

The importance of keeping up-to-date with all the new developments influencing commodities is prominent if you want to be successful at trading binary options using them as underlying assets. Basically, you must develop an appreciation about when to expect the prices of commodities to shift either downwards or upwards. You will have to undertake extensive research in the global demands and trends of all commodities that interest you, albeit if they are precious metals, petrol or natural gas, etc.

Fundamentally, the actions required to trade binary options based on commodities are exactly the same as all other asset types. The only major difference is that you will need to undertake more extensive research so that you can take advantage of the higher levels of volatility produced by this type of asset class in order to optimize your profits and minimize your risks.

However, although there are increased risks involved, there are also significant opportunities to gain worthwhile and consistent profits by using binary options to trade commodities as opposed to trading this asset class directly. This is because your call options just need to finish at least one point higher than their opening prices at expiry time for you to be in-the-money. Similarly, your ‘put’ options only have to be at least one point below their strike price for you to receive a payout.

In addition, binary option brokers provide a comprehensive selection of expiry times ranging from as low as a minute to in excess of a week. Consequently, if you are confident that a commodity will appreciate in value over an extended period, then you have the prospect of executing a series of very profitable ‘call’ binary options. You can also increase your ability to make even greater profits by mastering binary option strategies such as the following one.

Commodity stock affect trade is considered by many experts to be a very powerful and effective binary options strategy. Fundamentally, the concept is to exploit the impacts of the price variances of commodities on the share values of companies that trade them. For example, significant changes in the price of aviation fuel can seriously influence the share values of airline companies.

Consequently, if you know that an increase in the price of aviation fuel will occur soon then you could initiate a ‘call’ binary option with this commodity as its underlying option. You could also hedge this bet by activating a ‘put’ binary option using the shares of an appropriate airline as its underlying asset since you are expecting them to fall in value. By doing so, you would provide yourself with the opportunity for a double payout.

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