Finding the right market can be a challenge, but it is an important part of your success. If you go into your trading career knowing that you have a focus on oil, the U.S. dollar, and a handful of energy stocks, you are setting yourself up for failure if you don’t put your energies into a market that will reward you for trading these things. In the world of binary options, this can be tough to grasp at first since all of the underlying assets are grouped into four categories: stocks, indices, currencies, and commodities. These are obviously all different assets, and are traded in different markets all over the world.
Pinpointing What’s Best
Start with what you know. What are your interests? What are your strengths? Before you even begin trading, you have some of these, even if you don’t know it. If you are interested in politics, then you have a starting point! There are certain assets that rely heavily on politics, such as currencies and commodities and stocks that are highly localized. Oil is one of these, for example. Oil is closely linked to the economies of many Middle Eastern countries, such as Saudi Arabia and Kuwait, and thus their currencies derive much of their value by oil, as well. Another example of this is Russia. When oil lost so much of its value recently, the Russian economy was devastated, sending the ruble plummeting downward.
Making a Profit
These phenomena are referred to as the market pull effect, and knowing how to fully exploit it will make you a much more profitable trader. Basically, it’s a guideline that states that one asset can have a direct effect on another’s price. Instead of knowing that you are strong with currencies, you can translate that knowledge into other areas. This is another strength of binary options. Instead of having to jump around from broker to broker to trade each one of your areas of focus, you can centralize all of your trading in one site. From a binary options broker, you can trade stocks, indices, commodities and currencies, all in the same place. It’s a great tool for those that have multiple interests, and it is an easy way to speed up the process in which you profit off of it. You no longer need to use a stockbroker, Forex broker, and a commodities exchange; everything can be done in one spot.
What does all of this have to do with national markets? The binary brokers are open around the clock, but not all of the assets are available 24 hours per day. For example, you can only trade U.S. based stocks when the U.S. stock market is open from 9:30 am to 4:00 pm. If you want to trade Apple outside of this timeframe, you can’t, just like with a traditional stockbroker. The same holds true of other assets, too. Focusing on the right asset when the right market is open will give you an edge right off the bat with this type of short term trading as there will be a lot less wasted time on your part. And when you can use your time more efficiently, it becomes easier to create more money. Knowing which assets–especially commodities like oil–are traded most heavily in which markets allows you to more heavily focus your efforts during certain hours and in certain places.
In other words, having a working knowledge of what goes on in national markets allows you to work smarter, spread your knowledge out to more assets because of the market pull effect, and create a higher profit than ever before as a result.