Amongst the many different types of commodities included as underlying assets in the binary options market, one of the most commonly traded in is gold. Most traders find it extremely risky to trade in the commodity markets with gold.
The amount of risk that one has to endure requires a heart of steel. Moreover, trading in gold requires a lot of capital (more than $10,000), not to mention that a trader’s account can be completely washed out with monumental losses. This is probably why traders prefer to trade with gold via binary options.
Why should one trade gold in the binary options market?
Binary options markets provide a comparatively controlled environment. Also, it reduces the risk of enduring catastrophic losses while trading; it has much smaller margin requirements and therefore asks for lesser capital. The trader does not need to worry about gold rolling back many positions or the account getting over exposed.
This is all because of the intrinsic nature of binaries according to which the loss endured by the trader is restricted to the cost of the trade. If the trader makes all the correct moves and the trade obliges, then the trader can make up to eighty percent remuneration apart from the cost of the underlying asset.
However, there are certain things that should be considered before your trade gives you the desirable returns. There are the following different trade types that are usually adhered to in binary options trading:
Touch/No touch: In this type of trade the trader has to bet whether the price of the underlying asset touches the chosen price called the strike price or doesn’t touch. Certain variations such as double touch or double one touch are also prevalent. The main aim of the trader should be to monitor the behavior of gold in the markets which depends upon a number of factors.
High/Low: In this type of trading it is all about deciding whether the price of gold will end up higher than the given price or lower when it expires
In/Out: The gold price in this type must stay in the price range created with an upper and a lower line. If the underlying asset, in this case gold stays to remain in that tunnel then it is called ‘in’ or when it breaks out it is called ‘out’. Accordingly the trader is awarded.
These are three possible outcomes that can translate into some cash to finance that shopping spree that has occupied your mind lately. Let us now help you along the way.
An example: Gold is an extremely volatile commodity. Its price can be easily affected by market forces and economic policies. It was seen in early 2011 or 2012 that the markets faced heavy uncertainty. This for an example was a good time to trade in binary options with the underlying asset as gold.
This is so, because whenever there is any uncertainty in the market the price of gold goes upwards. Therefore a decent trader would use Touch/No touch trading strategy to make the best of such an opportunity. Since gold is bullish it would either touch the given target or not.