Binary Betting on Commodities
As a particularly volatile trading base, commodities are often the subject of binary betting, with most brokers offering spreads on the major commodities markets. Commodities are responsive to both supply and demand, and often inversely relative to the goings on across the world’s largest markets. Where stock markets take a turn for the worse, commodity markets are often buoyed by investors shifting their capital to investments they perceive as being more stable. As such, it can be possible to read the directional movement of commodities markets, which is all that is needed for successful binary betting.
Investing in commodities was traditionally difficult for those without high volumes of capital and the ability to finance warehousing and storage. As trading instruments become more sophisticated, these barriers have been largely broken down, and binaries are one such way in which traders can trade on the movements of commodity markets on the day without having to invest directly.
Say, for example, OPEC are scheduled to meet today, with analysts forecasting a cut in production. This could be taken as an indicator that oil prices are likely to rise, in response to the increased demand for oil as end users look to ensure they lock in their commodity at today’s prices. For the binary trader, this could spell an excellent opportunity to ‘buy’ oil, hoping that prices will settle above their current rate by the end of the trading day. If that happens, the position is made up to 100, with the trader banking the difference between 100 and his buy spread, multiplied by the initial stake.
Binaries are an alternative way to invest in commodities without the hassles of direct investment, and without the associated risks of derivatives such as futures. Whereas futures carry unlimited downside risk, binaries are capped both top and bottom with certainty, allowing the trader to calculate his gains and loss potential while trading in the highly responsive commodities markets.