Before you start trading binary options, you have a lot of decisions to make about what you’re going to trade and how you’re going to do it, and one of those is to figure out which markets you’re going to trade in.
Binary options trades can involve any number of underlying financial instruments.
Some common ones include stocks, commodities, and currencies, but there are many others which you may trade as well. How do you figure out which assets to trade?
Many strategies that can be used in trading binary options can be used in any market, which is a great advantage of trading in general. You probably want to start out simple however since becoming profitable is going to be challenging enough without lots of complexities. Some strategies undeniably make more sense in certain markets than in others as well—especially when you’re going to be using fundamental analysis.
If you plan to use fundamentals to make trading decisions, the set of knowledge required for binary trading of stocks is going to be totally different from the knowledge you’d need to do binary trades of currencies or commodities. Different technical systems may also work better with some markets than others, so that’s something to keep in mind as well. Some methods translate great between different markets, but require adjustments each time.
Different markets also have different hours, which may have an influence on your decision. With binary trading you can place orders well in advance of the expiration periods you plan on trading and walk away, but it’s great to be able to keep an eye on your trades if you can, and in some cases it’s completely necessary. The stock market opens and closes every day, but the Forex market stays open all night, so depending on where you live you might find trading currencies more accessible than trading stocks.
Once you’ve figured out what type of market you’re interested in trading in, you’ll need to test out the method you’re thinking of using.
Start with historical data from that market, and once you are profitable on that, move on to demo testing with live data (2 of our recommended binary trading brokers for Canada offer demo accounts, 24option and BancDeBinary). If you find you have timing issues, this is when you’ll need to resolve them. If the method you’ll be using is versatile, like a price pattern system, you also may want to start testing it out on different financial instruments to see how it performs. Some people do all their trading in one market, or even on a single financial instrument (like one currency pair), while others trade a variety of instruments.