Asset Classification in Binary Option Trading

One of the main reasons behind global success of binary option trading is the availability of so many opportunities and assets to trade on. You can choose any asset you want to trade without any restrictions. Understanding the basic principles that control each type of asset class is very important to achieve success and make profits.

A very important fact to remember is that in binary options trading, trades are actually predictions about price movements of the asset; there is no trading on the actual underlying asset. This is why anyone can start option trading without any need of big investment capital. Here are the asset classes and their details:

Stocks: This is the asset class which most of the general public have heard about. News about stocks is part of hourly bulletins on all news channels, and most people are at least aware of names and overall performance of big volume stock exchanges.  Therefore, traders, especially new ones are most comfortable trading on this asset class, there are relatively less details to learn for making trades, and the variety of stocks are also near to unlimited.

Commodities: Commodities are every day consumer items that have very high volume of trading. If trading on a commodity will cost $100,000, trading binary option on the same commodity asset will cost $10! Commodity exchanges fundamentally determine the rate of items we purchase at a supermarket or the price we pay when filling up at a gas station. This is why any trader who has insights about commodity price trends can benefit from trading binary options on these assets without the need of big start-up investments.

Currencies: In option trading, currencies are traded in pairs. This is because currencies are related to each other due to international trading structure. Since, currencies are traded in open foreign exchanges (FOREX); there values are consistently fluctuating in relation to each other.

The main difference in trading currencies in FOREX and in trading in binary option is the availability of minor currencies. In FOREX, you can trade on any major or minor currencies. But in binary option trading, you can trade only on major currency pairs. This is because such currencies are not constrained with external factor such as prices of gold etc.

Indices: You can also trade on index values of major stock exchanges around the world. The index value of a stock exchange is a direct function of the real values of assets traded at any time on that particular exchange.

Not every broker supports all the above types of asset classes and not all brokers offer trading on every asset in a specific asset class. Therefore it is very important to research well before choosing a specific broker, as no trader likes to be hand-tied at the time of opportunities.

For trading successfully in a specific asset class, the trader must first become familiar with the concepts governing that class. The factors involved, and the principles affecting price trends must be learned to earn profits from binary option trading.