You have most probably heard about Gold, Oil and Coffee in the past. If you didn’t, this is an excellent opportunity to educate yourself about the enormous potential that exists in commodities trading, specifically with binary options. Trading commodities with binary options might sound somewhat complicated at first, but if you pay close attention, you will discover that it’s easy and simple as “UP” or “DOWN”! Since the commodities market is very volatile, even the smallest market movement can create a worthy fluctuation you are able to benefit from.
Ask yourself this question: When was the last time you looked at the prices of Gold? If the answer is never, you are in for a pleasant surprise. Gold, just like oil, coffee, or silver, is considered as an underlying asset that can be traded through binary options. Because binary options trading presents a clear trend (scenario) to the prospective trader, all that needs to be done in order to make a substantial profit is to open a “Call” or “Put” option on it.
Sounds easy enough? Well, it sure is. Providing only 2 possible outcomes for the trade minimizes most of the risk that’s involved in the process of opening the binary option position, but as you most probably know, where there’s no risk, there is no reward. Consequently, the major key to success when dealing with trading commodities with binary options has to be the implementation of fundamental and technical analysis. Just to give you a quick example: If you forecast that the price of oil will continue to drop over the next week, you should consider opening a “Put” option with an expiration date of “End-of the-Day” or “End-of-the-Week”, if applicable.
It is also important to mention that the steps involved in trading commodities with binary options are identical to the ones involved in trading any other type of underlying assets, such as stocks, currencies or indices. With that being said, the main concept that should be taken under consideration when choosing to trade commodities with binary options is directly related to the impact of the price of commodities on the share values of companies that trade them. Whatever you do, the importance of keeping up-to-date with all the new developments influencing commodities prices is prominent to the success of your trade.
If you take a look at recent coffee prices, you will be able to clearly see that the market has a mistaken view of a large harvest in progress. Because the market is relatively optimistic with its view, the general trend for coffee prices is currently “UP”. The rise in Robusta coffee prices is expected to cause a moderate upward movement and this presents a wonderful opportunity for you to take advantage of increasing coffee prices when you start trading commodities with binary options.