There are several financial markets in which traders exchange assets worth trillions of dollars every trading day. These markets include the equities markets, the commodities markets (usually traded as futures and options), the forex market (also traded on the basis of futures and options), the bond market as well as the derivatives markets where instruments like Exchange Traded Funds, Exchange Traded Notes, credit default swaps, and other specialized derivatives are traded.
In this guide, we will talk about the markets for Binary Options:
What you will read in this Post
What are Binary Options markets?
However, participation in these markets can be very challenging for retail trader. Retail traders are those who trade the markets on an occasional basis, usually not as a full-time endeavor but as a second stream of income. Many of these traders, therefore, have no professional training, no background in finance as far as investment is concerned, and do not have access to the capital and trading tools that the big institutional traders have.
It is thus not a very balanced marketplace, as the pendulum of the market swings firmly in favor of the professional traders, who have a more structured system in place.
This is why the binary options market was created, as a means of giving the everyday average Joe in the markets the opportunity of tasting some of the pie that the big dogs have to themselves every day.
The binary options market has thus been structured in such a way that everything that is tradable is offered in a way that is less risky and more user-friendly for the retail trader.
As such, assets that are traded on the other conventional markets as spot, futures, options, and complex derivative contracts, are broken down and classified according to their individual asset classes on the binary options market. With this information, assets are classified under the following types, based on the underlying financial market in which they are traded:
- Stocks – Learn how to trade stocks with Binary Options here
- Stock Indexes – Learn how to trade stocks indices with Binary Options here
- Commodities – How to trade Gold & How to trade oil with Binary Options
- Currencies (forex) – Learn How to trade currencies with Binary Options here
- A few brokers may also add bonds, but these are rarely traded on the binary options market.
Stocks are also known as equities. To the average person on the street, they are also known as shares. Shares are traditionally bought and sold on the stock markets, but thanks to the binary options market, stocks can also be “bought” or “sold” as digital options. Now what is purchased is not the actual stock or share as it would have happened in the equities market, but what is traded are contracts based on the behavior of the stocks themselves.
The world as we know it has been influenced by the activities of a few companies, and this is why some of them are always listed on the equities asset class in the binary options market.
For instance, this article was typed on a laptop which was produced by a company (HP, Compaq, IBM, Dell, etc), running on an operating system (Windows, made by Microsoft). The laptop probably uses parts manufactured by several companies in Asia (perhaps Toshiba or Huawei), probably uses a processor from Intel.
After manufacture, it was probably transported to the point of shipping using a vehicle made from Toyota, Honda, TATA, etc. The car that transported the package probably ran on fuel taken from a BP service station or ran on gas supplied by Gazprom.
From there the product was shipped to my country through a complex supply chain, it ended up in my hands where again, I had to take fuel from Total to fuel my Nissan vehicle to take me to work, carrying the laptop. Do you get the drift?
A product like a laptop that affects everyday life all over the world involves the input of several companies, and these companies’ shares are what we see listed in the ‘Stocks’ asset class.
Almost every country in the world operates a stock market, but there are stock markets that play a strategic role in the world economy, and these are the stock exchanges whose shares we see listed in the binary options market. Therefore the exchanges located in the US, UK, Germany, Russia, Saudi Arabia, Qatar, Japan, Singapore, China, Australia, etc, are usually traded as stock indexes.
What would the world be today without crude oil? How would people store value if we did not have gold? How would drugs like silver nitrate and semi-conductor parts of mobile phones be made with silver? These are commodities that are very important to the global economy and they are offered for trade on the binary options market.
The basis of all international trade and exchange of goods and services are hinged on the exchange of currencies, and that is why today’s world cannot survive without forex. That is why we have certain strategic currencies always listed for trading on binary broker platforms.
(Risk warning: Your capital can be at risk)