Trading on the international commodity markets is considered by many professional traders as well as by private investors to quasi be the “supreme discipline”.
That is unsurprising. After all, this trading method is not as easy to handle as, for example, trading shares or index-certificates.
Indeed, there are several reasons for this.
On the one hand, analyzing the prices is not that easy.
This applies to both the technical and the fundamental analysis. Moreover, you need to keep an eye on the forex-market and the current news related to that subject. Binary options are suitable if you are looking for a rather simple way of entering the business of trading commodities.
Many challenges on the commodity markets
First of all, you should look at the difficulties of trading commodities. Usually, you should avoid trading with futures as a private investor since on this market, there are almost exclusively professional traders.
But certificates as well are fraught with difficulties since the money is invested over a relatively long term and you can only await the development of the prices.
Another problem is the fact that most commodities are traded in US dollars. This means that also fluctuations of the exchange rate of the US-currency have an effect on the prices if you are active in the euro-zone. So, those who buy a euro-certificate for commodities, have to analyze two markets at the same time.
Last but not least, the market for certificates is relatively susceptible to fluctuations. Since the volume- depending on the commodity- can be relatively small, the volatility here is often a lot higher than on other markets. By this, respectable profits can turn to clear losses within a very short time.
Binary options as a suggestive starting
Those who are interested in the prices of commodities and want to benefit from their development but do not want to have to solve the challenges as described above, find an excellent alternative with binary options. These special finance products are designed in that way that they refer to an underlying asset which the trader can benefit from by correctly predicting the market trend. At the same time, the possible return and the maximum risk are already known when buying the options so that you do not have to fear unpleasant surprises afterwards.
Of course, you should consider a few basic things with binary options that refer to a commodity such as oil, gold or silver as an underlying asset. For example, you need to accurately analyze the underlying asset before you start trading. Only on the basis of a good technical analysis you can hope for high returns with binary options in the long term. In addition, you should always keep in mind the current news. Since binary options usually only have a very short run time, they can have a strong effect on the price during a trading day.
With binary options, traders who consider these rules are offered an excellent introduction for trading on the international commodity markets. Of course, you do not directly trade on these markets. However, the options refer to the prices being determined there. Thus, you are in the midst of activities and at the same time, you can always estimate the ratio of risk and possible return in a good way.