The base asset in binary trading
Algorithm of work construction binary option on the financial market requires a participant of the trade to determine the optimal parameters: the frequency of repayment of contracts, the choice of trading time, the type of trading strategyrules money management. The topic of our article will be another important indicator - the basic asset, the quotes of which are used by the trader in his trade on the binary market. We will determine the degree of influence of this indicator binary trading on the trader's result and provide useful recommendations.
So, the underlying asset in binary trading is any commodity, currency, shares, which have circulation on the world trading floors. Binary traders use the underlying asset as the main means for betting options. The total trading result of the trading participant depends on the choice of this indicator of binary trading.
In addition to the direct dependence of the result on the liquidity of a particular underlying asset, which varies on different trading floors in the range from 60 to 90% profit on the bet amount, the underlying asset has an impact on the effectiveness and efficiency of the trading strategy (More than 100 strategies on our blog) applied by the trader.
It is this indicator that we will consider in more detail.
It is no secret that there are no completely universal trading systems. Each strategy works well on a certain type of underlying assets. This is due to different levels of market forecasting, volatility of quotation fluctuations and attractiveness of underlying assets for investors in different time periods.
Let's take for consideration and analysis of underlying assets the trading terminal of the broker BinariumThe most optimal list of financial instruments - more than 80 names of different types of assets - is presented there.
Currency underlying assets
The use of fluctuations in the quotations of currency underlying assets is a classic of binary trading. The reason for this is the highest level of liquidity of this tool on the binary market - up to 90%, a wide range of underlying assets of this type, on the platform Binarium (go to) more than 40 currency pairs are available for trading, as well as a wide range of effective trading strategies.
When using currency pairs as underlying assets, traders often use indicator trading strategies. This is the simplest and most effective approach for making predictions on this financial instrument. The simplest systems, for example, based on trend indicatorssuch as Alligator, MACD, RSI, Bollinger WavesThe trading statistics are excellent - up to 90% profitable contracts. A simple example:
The high activity of the currency market during the main trading sessions, the stability of the trend movements of the underlying asset and the level of profitability of the contracts allow traders to get the biggest profit in a comfortable mode.
Stock underlying assets
This type of assets includes stocks of corporations and companies listed on world stock exchanges. It is worth noting right away that the underlying assets of the stock sector of the market in binary trading are used as a means of investment. Here, without direct purchase of the asset, but with a simple binary option bet, a trader can get the maximum possible profit. The underlying assets of the stock market often use strategies based on the patterns of macroeconomic statistics' influence on the asset's value and the intensity of quotes' movement. news trading. Publication of various data on the company's work: profitability statistics, reports, new products release have a predictable effect on the stock quotes and allow to steadily earn on binary trading.
And the level of return on investment is hundreds of times higher than the liquidity of investment in the direct purchase of stock assets. As a result, the market reacted to the growth of share prices of this company. Forming a contract at the moment of statistics publication, a trader is guaranteed to make a profit. Commodity-based assets, such as oil, are also attributed to the stock assets. The primary market is subject to the same market rules and the same trading strategies are also suitable for the efficient use of raw materials assets as for the stock market.
The base asset for binary trading - metals
Precious metals in binary trading, as well as in classical approaches to trading on the financial market, refer to assets as safe havens. Against this background, it is rational to apply news trading strategies on this type of underlying assets, which we described above. However, under stable market conditions, gold quotes exhibit long-term forecasted trends, which allows you to apply trend Price Action" trading strategies (Price Action Traders Community), such as trading relative to trend levels:
The right choice of the underlying asset, the optimal trading strategy for predicting quotes, and the liquidity of options on a particular trading instrument can lead to maximum results and stable profit growth.