Trading Commodities with Binary Options

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Trading Commodities

You will learn about the following concepts

  • Introduction to commodities trading
  • Types of commodities: agricultural, energy, metals
  • Trading gold, silver and crude oil

Introduction

Trading commodities is quite popular among binary traders, because it gives them the chance to trade with a wide range of commodities which can be categorized in 4 categories:

  • Agricultural (soybeans, wheat, cocoa, coffee, sugar, coffee, rice, etc.)
  • Energy (crude oil, natural gas, gasoline, etc.)
  • Metals (silver, platinum, gold, etc.)
  • Livestock & Meat (lean hogs, live cattle, pork bellies, etc.)

Of course, there are many other types of commodities that are available on the markets. It is up to every trader to decide which commodities will best fit their trading strategy or style – for example, some commodities are a better choice for traders who rely on call/put options, while other commodities are a more reasonable choice for touch/no touch options.

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Commodities in Details

One of the main reasons why so many binary traders are attracted to commodities is the fact that there is plenty of information about these types of assets on the web. You can quickly find detailed technical analysis reports, as well as the latest news regarding specific commodities. However, these assets can cause you a lot of trouble as well. One of the major setbacks of trading commodities is the fact that these assets are often affected by factors which are impossible to predict. The value of these assets may quickly decline or increase in case of unexpected events such as bad weather conditions, natural disasters, epidemics and even man-made mistakes.

If you are familiar with basic economic principles, then you probably know that they apply for commodity markets as well. If for any reason a commodity’s supply declines, then it is almost certain that its price will drastically increase. It is true that investors often wait for epidemics or major natural disasters that make market prices more volatile – if you wait for the right moment, these events can work in your favor, but they can also cost you a lot of money if they occur unexpectedly.

What We Will Talk About

In our tutorial we shall cover the following commodities – Gold, Silver and Crude Oil. You will receive valuable information about each one of these assets, as well as tips on how to be more precise in your predictions, that concern one of these commodities. You will also learn about the factors, which have the biggest impact on the value of Gold, Silver and Crude Oil, as well as how to predict sudden market changes.

Trading Commodities Using Binary Options

If you have traded commodities, you know that volatility can be a concern. Not to mention the margin requirements to trade commodities require you having access to margin usually well over $1000. However, this trend is changing since the introduction of commodity binary options. Most binary option sites now offer such commodities as oil, gold, corn, indices and bonds. Like the rest of the binary options available, commodity binary options have the same goals: expire above/below the purchasing price in a fixed amount of time.

Like the rest of the investment vehicles available on binary options, you must have a solid background in order to be successful. This means you must have prior knowledge on commodities and their price action. Similarly, you must also have some knowledge of fundamental and/or technical analysis. However, since binary options are a short term investment, technical analysis would be the more ideal way to analyze trades.

In order to place a trade, you must login to your broker’s website. Once there select your commodity and analyze that particular commodity’s price action. If we see oil, for example, has some downside pressure we may elect to purchase a put. Conversely, if we believed oil was positioned to rise, we would buy a call. Once we have opened a trade, we must wait 30 minutes to see if our position expires in the money (profit) or out of the money (loss). Remember, binary options that expire in the money walk away with 80% return on investment. However, losing trades can see 85% of the initial investment disappear.

Commodities do face some risks that other investments do not when it comes to binary options. One fact is that oil for instance is the fact that the US Department of Energy releases inventory updates every Wednesday. Similar reports come out for other commodities such as natural gas as well. If you trade commodities you must find out whether weekly reports are published and when. Unless you are a seasoned trader, I would avoid trading commodities during report releases. However, once the report has hit the markets, you may be presented with a trading opportunity.

For a beginning trader interested in commodities and futures, binary options are the way to go. As I stated before, high margin requirements (assuming they would be approved for margin use) really limit what sort of commodities you can trade. The margin requirements to open 1 contract of crude oil come in at $6,885. Most new traders do not have this sort of capital available, which closes the door to commodity trading in the traditional sense. However, binary options for oil require no margin.

The bottom line here is that binary options have opened up another investment vehicle to new traders and traders who do not have large accounts. Be warned, commodities are much more volatile than stocks which can be a little overwhelming for those who are not used to it. This sort of volatility requires that you have strong prior knowledge in technical analysis at the very least. Additionally, new traders should keep their binary option positions on the smaller side. Do not risk all your capital on one trade or it could destroy the entire account. Remember, a losing binary options trade takes away 85% of the initial investment. This means if you traded $100 of oil and the option expires out of the money, you only have $15 after that trade. That’s why you must take the proper steps to preparing yourself for these types of trades. They can be lucrative but they can also be destructive. In the end, if you properly prepare yourself, there is a world of potential gains at your disposal.

Also interesting is this article at Optionsellers.

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A Guide to Trading Binary Options in the U.S.

Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?

Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.

Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.

Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.

U.S. Binary Options Explained

Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.

Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?

If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.

The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.

Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.

The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.

A Zero-Sum Game

Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.

Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.

A trader may purchase multiple contracts if desired. Here’s another example:

  • NASDAQ US Tech 100 index > $3,784 (11 a.m.).

The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.

You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.

Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.

Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)

Introduction To Commodities Trading In Binary Options

Commodities are an integral part of the day-to-day life. Commodities have been used since the dawn of civilisation to advance the knowledge of humankind and to improve the overall quality of living. However, the association of value to a particular commodity and the constant changes in prices of commodities have led to the speculative nature of the commodities market. The past couple of centuries has witnessed the tremendous growth of commodities trading as an alternate financial product, where speculators and actual market participants played a vital role in contributing to the overall market dynamics.

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The last few decades were extremely vital for the growth and expansion of commodities trading as a viable investment opportunity, as investors were able to mitigate their risks by opting to move their investments to safer assets. Commodity trading is popular among all kinds of investors for both short-term and long-term investments, as commodities offer a safe haven against market volatilities that can tend to create huge movements in the Forex and stock markets.

Seasoned traders and speculative investors are already familiar with numerous conventional products available for trading in commodities, which are offered as Futures and CFD contracts. These products allow traders to hedge against all market fluctuations, without suffering a massive risk of loss from market volatilities. Speculators also use these products to take advantage of short and long-term fluctuations of the market. However, the concept of commodities binary options is still new, as it involves betting on the movement of the price of an underlying asset without actually investing in a commodity. Professional binary options traders have come up with new and exciting ways to make money through binary options products, and commodities are some of the most widely traded binary options assets in the industry.

Combining Binary Options Trading With Commodities Trading

Binary options trading with commodities is a relatively new idea, made popular by the rise in popularity of binary options trading among new-age traders. Binary options brought about a change in the way traders perceived the markets, as it allowed a new form of betting in the markets without actually holding an underlying instrument. Binary options assets are virtual contracts that have fixed expiry times, where the outcome of a trade is determined by the direction of an asset with respect to the original entry price. In simple terms, binary options trading enables a trader to wager a fixed amount of money on the direction of an underlying instrument and makes money if the asset moves in their favour, while loses money if the asset moves away from their original direction.

The fluctuating prices of commodity futures and CFDs provide an option for traders to bet on the price movements without actually purchasing or selling an asset. Binary options trading imply that there can only be two outcomes of a trade, either a fixed return or a fixed loss. The fixed upside and downside of a binary options trade are considered as one of the major advantages of investing in binary options. Therefore, traders can predetermine their risks in the market before they enter a position, and only loses the amount invested per trade, rather than the whole account equity in case of a massive drawdown.

Commodity trading can be volatile, as the liquidity in the markets can be minimal at times. As a result, commodities may experience significant spikes and massive slippages, all of which contribute to a risky environment for short-term traders. Binary options contracts are popular for their short expiry times, and it is common for profitable trades to turn into losses within a fraction of a second. Therefore, it is imperative for binary options beginners and amateur traders to be extremely careful while dealing with binary options commodities products and other allied instruments, especially during the early stages of their careers.

A Basic Outline Of The Commodities Offered in Binary Options Trading

Commodities are termed as all the assets that are freely floated in the markets, and there are hundreds of commodities that are constantly traded in the global economy. Unlike the traditional Forex or stock markets, it is virtually close to impossible for brokers to provide all the commodities available in the market for binary options trading. Although a handful of brokers may provide an extensive list of commodities, a majority of binary options brokers only provide access to around 10 of the most popular commodities in the financial markets. Here are the most common commodities that you can trade through a fair majority of our recommended binary trading companies:

  • Gold
  • Silver
  • Platinum
  • Palladium
  • Copper
  • Oil (Crude, Brent)
  • Natural Gas
  • Corn
  • Coffee
  • Sugar
  • Wheat
  • Soy Beans

Unlike other underlying asset classes, commodities allow traders to concentrate on a small group of assets and reduce their risks in the market. Trading can become a complicated affair for beginner binary options traders, as it is easy to be confused by the sheer number of tradable assets. Commodities, on the contrary, enable traders to choose a select few underlying instruments and diversify their investments according to their risk appetite. Binary Options commodity trading is predominantly popular among expert traders, as it allows them to earn stable results over longer durations, with comparatively nominal risks.

Why Trading Commodities Is Easier With A Binary Options Account

Conventional commodities trading in the financial markets involves buying and selling commodity contracts through Futures, which are virtually agreements between market participants to buy or sell a predetermined amount of the commodity at a future price and date. Futures trading does not actually involve the physical transaction of the underlying commodity but is merely a contract between a buyer and the seller. A Futures contract can be priced at thousands, or even hundreds of thousands of US Dollars (or its equivalent in other base currencies), which requires traders to invest a significant sum of money to be able to trade in the commodities markets. In order to enable smaller traders to speculate in the market or to invest in commodities Futures, brokers may offer a high amount of leverage for margin trading. Leveraged trading can result in losses that can far exceed the initial investment; still, traders will be required to actually own the contract to be able to partake in the transaction.

Conversely, binary options trading removes all the complex procedures involved in commodities futures trading, and smaller traders can minimise the risk of margin trading to a greater extent. Commodities in binary options only involve a basic wager on the direction of movement of an asset within an expiry time, and traders needn’t worry about the magnitude of the movement or other fundamental market factors. If a trader is accurate in his/her prediction, it results in an in-the-money (ITM) trade, while an error in judgement will result in an out-of-the-money (OTM) trade. ITM trades have fixed gains that can provide around 60% to 95% ROI, while OTM trades will only result in the loss of the invested amount. Some brokers may even offer the option of a refund for losing trades, which can qualify up to 25% returns.

Investors can control their risks in the commodities binary options market by choosing to invest as low as $10 per trade, while some brokers may even allow even smaller investments of $1. When compared to the leveraged futures trading, a binary option can provide relatively higher returns within a shorter duration, while keeping the risks in check. Of course, both products involve a massive amount of risk, but binary trading is relatively simple, convenient, and involves lower capital outflow than the traditional commodity futures trading.
Liquidity is one of the primary concerns for commodities trading, as traders may be unable to tap into the liquidity of the markets for the traditional futures market. Nevertheless, binary options traders don’t have to worry about any liquidity problems or problems of low/high volatility, as the binary options market allow traders to trade commodities 24 hours a day during the weekdays and during live trading hours over the weekends. Traders can enter into binary options contracts without any liquidity restrictions unless the broker has special conditions concerning the availability of such contracts.

Comparing Commodities, Forex, & Stock Trading In Binary Options

Commodity trading, if offered as CFD products, is similar in the trading dynamics to the Forex and Stock markets, while futures trading involve a different model to that of the traditional forms of CFD trading. In the binary options market, however, commodities, Forex, and stock trading are all similar in the trading concepts, payouts, expiry times, and the binary options types. Traders can virtually choose any binary options product, and enjoy largely comparable trading conditions, albeit with a few differences in payouts and expiry times.

Commodities are traditionally known to offer lower payouts than Forex or Stocks, but the ROI should still meet an average of 70% for winning trades. Some of the more popular commodities such as Gold and Oil may qualify for higher payouts, but it will depend on the broker. Brokers are transparent about their individual payouts policies and will provide detailed information about the payouts, minimum investments, and the types of binary options products that are available for commodities trading.

The Advantages Of Trading Commodities As Binary Options

  • Fast Paced Trading – Traders don’t have to wait for long to determine the outcome of a trade, as binary options have fixed expiry times that starts from 30 seconds. The fast-paced trading environment is exciting and can be rewarding for traders with a high-risk appetite.
  • Lower Capital Outflow – Binary options brokers, allow its users to start trading using a small trading capital, without needing to invest large amounts of money in traditional futures contracts. Binary options trading also prevent the need to trade on margin, as leveraged trading can lead to higher losses.
  • Less Complex Than Traditional Commodities Trading – Binary options trading is simple, as traders can bet on the direction of the movement of the market without having any advanced knowledge of the dynamics of commodities futures or CFD contracts.
  • Fixed Profit/Loss – Traders can choose the amount to risk per trade, as the losses are limited to the invested amount. The profits for winning positions are also fixed, making it easy to calculate the ROI and long-term profitability of trading.
  • Ability To Trade Around The Clock – Binary options trading allows a trader to trade around the clock, and without the limitations of trading due to liquidity or other volume-based issues. Brokers also provide an opportunity to trade on the move through excellent mobile trading apps for smartphones and tablets.

The Risks & Drawbacks Involved In Commodity Binary Options Trading

  • Reduced Option To Manage Trades – Commodities futures and CFD products usually allow traders to modify their positions in the market according to the development of the trade, but binary options trades can only be modified with several restrictions. It is particularly hard to manage short-term binary options trades, which means that traders are at the mercy of the markets until the time of expiry.
  • Reduced Number Of Assets – Brokers usually limit the number of commodities to less than 15, and it is rare for brokers to offer anything beyond that basic set of underlying assets from the commodities market.
  • Large Influence From Weather & Macro Economic Events – Commodities are hugely dependent on a wide variety of factors, including weather, news, and other economic events. The high volatility also leads to massive changes in price, which can make it risky to invest in the commodities.
  • Binary Options Trading Is Risky – Binary options product, in its entirety, is a risky investment. Binary options trading may be similar to gambling and betting, where the house has the best odds. Therefore, it is vital to choose a reliable and regulated trading partner to ensure the safety of your funds.

How To Trade Commodities Binary Options

Step1: Opening A Binary Options Broker Account

The first step to access the commodities market would be to choose a binary options broker that provides an exhaustive list of commodities through its brokerage service. Be careful with your choice, as some brokers limit the commodities binary options assets to Gold and Oil, and such brokers may not be suitable if you are looking to expand your investment portfolio to some of the most popular commodities in the market. Our professional binary options broker reviews offer individual analysis on all the different financial assets offered by a broker, which can help you in making an informed choice.

Step 2: Making Your Initial Deposit

You should only invest money in the markets that you can afford to lose. Binary options trading can result in the loss of your entire investments, which is why you should choose an initial deposit that not only satisfies your trading requirements but is also reflective of your risk appetite.

Step 3: Choosing The Commodity

You can either choose a single commodity or opt to invest in multiple commodities, as per your trading preferences. The choice of an asset depends entirely on the traders’ preference, as different commodities have different market characteristics.

Step4: Analysing The Market

Market analysis is the most important part of trading binary options successfully. Traders must indulge in a healthy combination of technical and fundamental analysis to evaluate the performance of a commodity in the markets.

Step 5: Choosing The Binary Options Product & The Time Of Expiry

There are different binary options products for commodity trading, such as range, turbo, classic, and ladder options, along with separate expiry times that are relevant to the type of option. Individual binary options products may have varying payouts and ROI, according to their underlying characteristics.

Step 6: Opening A Trade

Entering a trade is quite simple, as all you need is the investment amount and your option to call or put an option. Brokers usually provide all the essential trade information through the platform, which can be used to analyse the trade probability and other trading conditions.

Step 7: Trade Management & Outcome

Some brokers may offer the opportunity to manage trades, but even in that case, trade management may only be available for long-term positions. At the time of expiry, the platform calculates the potential returns as per the trade outcome, and credits or debits money to/from your account as the case may be.

Can Binary Options Trading Be Profitable For Commodities Traders?

Profits are not guaranteed in the financial markets, more so in binary options trading where brokers have the edge over traders. The commodities market carries the same risks as any other financial products, and the probability of losing more than the account equity is a significant threat in Futures and CFD trading. In that regard, commodities traders may benefit from the reduced risk and lower capital exposure through binary options trading, without making any significant compromises on the upside earning potential. In the event of a losing trade, traders will only lose their money invested per trade, rather than losing their entire account equity or owing money to their broker. Commodity binary options trading can be a profitable investment opportunity for traders, provided they follow all the rules and strategies of successful money management and proper evaluation of the commodities markets.

Binary Options Commodities

Introduction

What are binary options commodities? Commodities are a class of assets which are traded on the binary platforms that showcase the various agricultural and extracted products. These commodities are usually listed on commodities exchanges in specific trading hubs across the world.

Review

Review

Generally speaking, commodity trading is tightly regulated and the contract specifications are more stringent than the currency or stock markets. While a stock price may not experience much intraday movement, the same cannot be said of commodity prices. Many retail traders cannot afford to trade commodities on the regular exchanges because of the high margin requirements. This is why the ability to trade Up/Down contracts on commodities binary options is a welcome alternative for these traders. With binary options commodities, the minimum trade requirement on most platforms is something that retail traders can generally afford. Even though it is hard to find pairs binary options being offered for commodities, the regular trade types such as the Up/Down option are a favoured option.

The commodities which are traded as binary options commodities are drawn from the famous commodity trading hubs. The most commonly traded commodities binary options are:

  1. Crude oil
  2. Copper
  3. Coffee
  4. Cocoa
  5. Silver
  6. Gold
  7. Natural gas
  8. Corn
  9. Platinum
  10. Palladium

We can see that these commodities are derivatives of agricultural cash crops, or are metals which are extracted from the ground. These commodities have various domestic and industrial uses. These constitute the factors that determine the demand and supply of these commodities in the global markets and hence their prices.

Is it easy to trade commodities on the various broker platforms? No it is not easy. Indeed, many traders will need to do even more work in understanding the nature of commodity markets. Many of these lessons will require not just demo account practice, but also practice on regulated platforms that offer low deposit accounts or no deposit bonus accounts. This is the only safe way to get a grasp the basics of binary commodities trading before committing a larger amount of funds to the exercise.

Followers of the Sharia principles of investing may also wonder if trading commodities is halal. There are brokers that offer halal trading conditions for such traders.

What Differentiates Commodities Binary Options & Commodities?

Certain differences exist between trading commodities through binary options and commodities trading in the conventional markets. Some may even wonder if binary options are a good way of trading commodities. Let’s look at the key differences between trading commodities binary options and trading commodities in the conventional stock exchanges?

  1. Commodities markets are traded on leverage and have high margin requirements. It is possible to borrow from the broker in the commodities market to execute trades. You will find out that in binary options, the market is unleveraged. The trader will have to come up with the full value of funds required for commodities binary options trading.
  2. Returns and payouts on investment in conventional commodity markets are determined by trade size and the number of points that the price has moved in the trader’s chosen direction. In binary options commodities, just one pip in the Up/Down trade can earn the trader the payout if the move was in the chosen direction.
  3. In binary commodities trading, the actual commodity is not held in physical form. In conventional commodities futures trading, there is actual delivery of the commodity in question. But if the commodities were traded as CFDs or as options, then the same conditions of non-delivery will apply.
  4. When it comes to expiry times, traditional commodities markets and binary options commodities share a common factor. The trades will eventually expire, though the expiry times will be different.
  5. The same commodity assets traded on conventional exchanges are presented for trading as commodities binary options.

How to Trade Commodities Binary Options

In commodities binary options trading, you can profit from rising and falling prices, just the way it is done in the conventional markets. Commodity prices in the binary options market are mostly moved by news that influence the demand and supply of each particular commodity. Each commodity has its own peculiar set of market fundamentals. For this reason, it is suggested that traders pick just the commodities that they can understand and handle, study their fundamentals and focus on trading them. A review of trading activity of a pooled set of traders showed very clearly that attempts at trading all commodities listed on the broker’s platform usually does not work out well.

Step 1

Check out the binary options commodities asset list of several brokers. See which commodity markets to trade are offered. Usually, the global importance of commodities such as gold, silver, crude oil and copper mean that they are almost always found on the platforms of hundreds of brokers in the market. So ensure that the broker you want to trade with offers these commodities. A few others may be added to the list but they should be considered as accessory assets to trade.

Step 2

Commodities markets have two trading hours per day, if we use the London time zone as a reference point. This means that there is a break period in between the trading times. These are the times when the commodity assets will be available for trading. Make a note of the trading time of your preferred commodity asset and adjust your daily schedule accordingly.

Step 3

As has been mentioned earlier, each commodity has its own characteristic fundamentals that influence supply and demand and therefore asset price. For instance,

  • Crude oil is subject to OPEC production quotas, crude oil inventories reports, political events in the middle East.
  • Copper prices are heavily dependent on industrial data from China, which is the world’s largest copper importer.
  • Gold is a safe haven asset and prices are pushed higher during periods of market turmoil and economic uncertainty.
  • Silver is a heavily used industrial component in manufacturing of electronics, smartphones and also pharmaceuticals.

Any trader interested in trading binary options commodities must have a solid understanding of the fundamentals for each asset, and also know how to interpret the data for trade execution on the platforms.

Step 4

A popular market saying is “trigger fundamentally, enter technically”. It is not enough to simply know that a particular fundamental influence will move a commodity asset up or down. You have to know how to enter the trade using solid technical basis. It is even more important in binary options where one pip can decide a trade in profit or loss. Therefore, a low deposit account or a no deposit bonus account must be used to practice how to enter trades on commodity assets. Prices of commodity assets tend to have large swings, so entries must be spot on to avoid the effects of drawdowns.

Step 5

When you have your no deposit bonus account, or a low deposit account, you should be able to test your strategy as well as your trading robots there. Beware of scams. There are a lot of scam software in the market so you need to test every software you want to use. Some software providers provide a trial period. Use this trial period to put your trading strategies and software in order for prosecution of your trading exercise.

Step 6

There can be no replacement for study. Study resource materials and read books on how to trade commodities for money. There are not many materials out there on how to trade commodities binary options, therefore you need to combine several resource materials to get the totality of the knowledge package you require to succeed in the market.

Commodities are also correlated with other assets. You need to study commodity market correlations, as they can provide insight into trading opportunities where these are not immediately obvious.

Step 7

Always go back and review your previous trades, especially the losing ones. Once you are able to detect where a trade went wrong, you can make the necessary corrections and adjustments to make them right in future.

Q: What are the common commodities traded in binary options?

Answer: The commonly traded binary options commodities are crude oil, corn, coffee, wheat, cotton, copper, gold, silver, platinum and palladium.

Q: How much capital do I need to start trading binary options commodities?

Answer: Most binary options brokers will allow you to open accounts with a minimum of $200. However, studies have revealed that you can do more with greater capital. So you should aim to put as much money as you can muster into your trading account. Trading binary options commodities means that you do not need the large capital that commodity traders who trade on the futures exchanges must have in their accounts. You can place trades in binary options commodities with as little as $10.

  1. I cannot deposit more than $500 in my trading account. Can I still trade binary options commodities?

Answer: Absolutely. Many brokers allow you to set trades with a minimum of $10, which is within risk limits on a $500 account.

Q: How do I choose a commodities binary options broker?

Answer: Check to see that the broker is regulated and licensed. Then look up the asset list to see if the broker offers the commodities you are interested in. If you are satisfied, you can proceed to open an account and trade.

Q: What kind of returns should I expect from trading binary options commodities?

Answer: The payout for most successful trades on binary options commodities is 80% on the average. However, you will lose 100% of your investment in a losing trade. You therefore neeed to maintain a performance rate of 2 wins for every loss to get a profitable return at the end of the month. A disciplined trader with a good system and sufficient capital can expect returns of between 30% and 50% in the long run.

Q: Can I make a living trading binary options commodities?

Answer: It takes a very long time to achieve mastery of the markets. Until you do this, you are better off combining trading with another income generating activity. If you do exceptionally well, you can start to earn a living from trading binary options commodities. Please note that in addition to trading for profit, you can also make money selling trade alerts or managing accounts for others.

Q: Can I day trade binary options commodities?

Answer: The existence of short expiry times within which binary options trades are resolved means that it is possible to day trade binary options commodities. The longer the expiry times you use within a day, the clearer it will be to detect trends and make better, more informed trades.

Q: Must I trade only on my computer?

Answer: You can trade commodities binary options not just on computers but also on smartphones. Ask your broker for the URL of their mobile app on the respective stores.

Best Binary Options Brokers: 2020 Ranking
  • Binarium
    Binarium

    Best Choice! The leader in our ranking!
    Perfect for beginners!
    Free Demo Acc + Free Trading Education!

  • Binomo
    Binomo

    Good choice for experienced traders!

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