There is one crucial element without which binary options trading could not happen – underlying assets.
Binary options trading is widespread in South Africa the interest in underlying assets as building blocks of binary trading also became interesting for traders.
Binary brokers also know that South African traders like diversity so they are dedicated to providing that. It is not uncommon to find selections of over 200 underlying assets available for trading.
In this article, we will explain popular underlying assets in binary options and particularities pertaining to each group.
Types of Underlying Assets in Binary Options
Newbie traders in South Africa who wish to participate in binary trading usually have loads of question marks floating around in their head. Chances are, at least one has to do with popular underlying assets.
Firstly, traders have to know that the most common types of underlying assets in binary options can be sorted into four groups – currencies, commodities, stocks and indices. Each category is a story on its own and is affected by financial events differently.
That is why it’s so important to know as much about the nature of underlying assets as possible.
The usual course of action in the binary options trading process is to select an underlying asset, invest a certain amount of money in it and decide which way traders believe the price will head. Additionally, South Africans will also have to choose a trade option and the expiry time.
Those traders with more experience will also reach for additional trading tools or features, as well as using tested strategies they found to be working for them. It is this combination of various elements in binary options that is most likely to bring in the desired profits.
How to Choose Particular Underlying Asset?
At the very core of binary options trading is the prognosis of whether the price of the underlying assets is going to go above or fall below the target price. Though is sounds reasonably easy, it does take the experience to be able to make the correct prediction in order to make profits.
South Africans who have been trading binaries longer have more knowledge and will respond quickly to changes that happen in the financial market. This also emphasises the importance of continual market monitoring because the current market circumstances play a big part in the final trading decision.
Those traders who cannot or are not willing to make such a commitment are better off trying alternative ways of trading binaries such as using trading software like Binary Options Robot or Trader’s Buddy.
However, those South Africans who find this traditional binary options trading more appealing could probably need some assistance along the way until they gain some experience and become more confident in their decisions. Numerous educational materials can help a lot in that respect. This source of info is handy and important because not all popular underlying assets in binary options behave the same.
Some are riskier than others, while some underlying assets could be more profitable.
Knowing more about each type of underlying assets and following market trends carefully can prevent serious money loss. Another way of controlling risk and potential loss of funds is to trade with underlying assets which are more stable and are not so easily affected my volatility which happens on the financial markets.
Currency Trading in South Africa
Probably the most popular underlying asset in binary options, currency pairs are the common choice for novice traders in South Africa. With most binary brokers, traders will find a wide selection of currencies to trade with. Most popular currencies are USD, GBP and EUR which are also the strongest currencies on the market.
When trading currencies, South African traders can usually use several trade options like High/Low and plenty of expiry times. Some currencies are more predictable than other while some could be greatly affected by the changes happening on the market.
In recent history, we all witnessed what happened to EUR with the serious crisis affecting Greece.
Stock Trading in South Africa
This is another hugely popular underlying asset in binary options trading and many trades in South Africa and across the globe select this particular underlying asset.
In part, stocks are popular because it is fairly easy to follow what is happening on the market due to plenty of info. Especially when it comes to stocks such as Apple, Coca-Cola, Microsoft, Facebook, Twitter etc. Trading stocks with binary options have reduced risks since traders are not actually buying or selling stock but rather just predicting what is likely to happen with the price.
Commodity Trading in South Africa
Commodities are the oldest assets in the world which have been around for as long as there are people. This is also the oldest manner of trading since commodities are essential goods like oil, coffee, gold, corn, silver but also gas or platinum.
Commodities can be very exciting underlying assets to trade in binary options but, they are also fairly risky. Because of their very nature, there are numerous elements which can affect them, from natural disasters to political situations or demographics.
It might be better for novice South Africans to slowly start with commodity trading as it does take more skill and knowledge.
Indices Trading in South Africa
Lastly, another among the popular underlying assets in binary options trading are indices. Now, these underlying assets are considered to be the most stable. This is due to the fact that the price of indices is not so heavily dependent on the present market events.
Certainly, not as much as the other mentioned underlying assets. This also means that the risk in trading indices is lower but this also means that the profits are lower too. Most popular indices in binary options are Dow Jones, S&P 500, Dax, FTSE 100 and Nasdaq.
All the listed underlying assets could bring profit to hopeful South African traders. However, collecting information, learning and slowly testing each of them in the trading process is the key.