Binary options is a financial product where the pay off is limited against a limited loss. It can prove to be an effective instrument against extreme market volatility.In commodities binary options are available in commodities such as oil,natural gas, gold, silver corn,etc.
The common misconception among traders is that binary options is a very specialised field and require lot of skill and training.This is not true.You can trade in binary options with a little skill and no prior experience in financial markets.The minimum requirement is to predict the direction of an asset and trade accordingly.If you believe that prices will rise from the present value than you can take a call option and if you feel that prices will fall than you can take a put option.Successful binary option trader often uses very simple trading tools and strategies.
There are various strategies in binary options like trend strategy, Pinocchio strategy,straddle strategy, risk reversal strategy,Fibonacci strategy etc You should always follow news like when trading in oil you should know and avoid the weekly statistics of US Department of Energy inventory on Wednesday.If you are trading commodities than you must find out whether weekly reports are published and when .Binary trading also help many traders to hedge positions against their future delivery in physical market and losses arising because of market fluctuations.
Traders should not get carried away while trading in options as one should always remember that the directional call you have made is for a period of time and a potential profit can turn into a loss over that specified time period .Some traders leverage more than they can handle as the margins are low but it should be noted that the actual loss can sometimes erode your margins completely.Trader should always be prepared for unfavourable market conditions where he or she can average or cut their losses to further trade in options.Trading does not encourage reckless gambling and one should be cautious and analyse their options trading.Traders should have a sound analytical mind and should be smart enough to calculate the percentile profit or loss before jumping into the very lucrative binary options trading.