Trade Commodities with Binary Options

What are Commodities?

If you have looked at any broker’s site you will have noticed that it offers trades with commodities as underlying assets. Commodities come in many forms. Some are extracted from the ground (oil, gold) and some are derivatives of ground products (natural gas). Agricultural products (corn, coffee) and their derivatives (sugar) are also commodities. The value of these commodities comes from the perceptions of traders, farmers, dealers and market speculators. The demand of the product, or commodity, greatly affects the commodity’s price.

Commodity Trading

In the market, commodities are bought and sold without the physical exchange of the product and traders profit from the price differences. Investors can also trade commodity futures which may or may not involve physically exchanging the commodity.

In order to trade commodities themselves you would need to have a lot of capital. So, if you have some money to invest but not a ton then consider trading a commodity through a binary options trade. The most profitable way of trading a commodity is through a binary options trade with the commodity as its underlying asset. Commodity trading can be done through the exchange of the Chicago Board of Trade and the New York Mercantile Exchange. Just like any other asset, when your binary options trade is based on a commodity, you just need to decide if the price of that commodity will rise or fall by the time the trade expires.

How to Trade a Commodity

In order to start trading commodity binary options you’ll need to open an account with an online broker. You will need to fill out some personal details and provide proof of address and identity. Make sure that your broker uses a secure and encrypted method to transfer your information. Next, deposit your money into your account through a bank transfer, credit card or third-party e-wallet provider. Then you’re ready to start trading any of the commodities offered by the broker.

Commodity binary options trades are a great way for a new trader to enter the market. If you are unsure of which commodity to use for your trade then pay attention to the news. Take advantage of professional financial reports and journals. Any time a commodity is being talked about there is an opportunity for traders to profit.

Often, economic events and natural disasters have a great effect on the value of a commodity and can lead you to making the right prediction. These events happen quickly so make sure you are prepared to make a trade as soon as the news breaks. Remember, one of the greatest benefits of trading a binary option is that you can still make the same high profit even if the price is about to fall. If this is the situation, make sure you buy a Put option.

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