Underlying Assets

When trading binary options, you inevitably have to learn about underlying assets. As such, we have put together a brief guide about asset categories and trading tips.

Indices

This category includes the Dow Jones, FTSE-100, DAX-30, NASDAQ, and more. An index fluctuates based on its group of stocks. Since its value is based on the overall performance of its stocks, an index tends to be quite stable.

Trading tip: If you are looking for low volatility assets, indices are a good category to begin with; they are less likely to be heavily affected by political and environmental factors.

Commodities

These include goods such as gold, cotton, silver, and oil. They are physical products that are highly susceptible to demand and supply factors.

Trading tip: Trading commodities requires a particular attention to detail as even the slightest change in political, weather, or economic circumstances – both at the global and local levels – can affect prices. If you have a keen eye for spotting influential factors, this could be a very rewarding category to trade within.

Currency Pairs

Examples of these include the EUR/GBP, AUD/USD, EUR/USD, and the USD/CAD. With binary options, you are making a prediction in regards to whether the value of one currency will rise or fall against its counterpart (within the pairing).

Trading tip: Currencies are highly influenced by a country’s economic status. If you have an interest in a given country’s political, economic, and social factors, trading currency pairs could be a good option, as you need to be on point with following the news closely.

Stocks

Stocks include popular companies like Google, Apple, Vodafone, and JP Morgan. A stock’s performance is highly dependent on the health of its company.

Trading tip: For beginners, stocks may be the easiest to trade because you can focus your energy on one specific company. Your ability to track any major company news announcements or changes closely will be essential to your success.