How To Trade Gold Using Binary Options

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This article is sponsored by OptionBit which is our recommended broker for trading gold with binary options. Gold is one of the underlying assets traded in the binary options market. This is just as well too, because trading gold in the commodities market is just too risky for most retail traders. The binary options market provides a way out to trade gold in a controlled environment, with reduced risk of a catastrophic loss, smaller margin requirements and by consequence, lesser trading capital needed.

There is no fear of gold rolling back by almost a thousand pips against your position before it decides to do as you wish it to. No fears about over-exposing your account. If the trade behaves as the trader wishes, he gets his cost back and some extra. In trading gold, there are several things to consider before your desire to make money from it transcends from the pedestal of dreams to the reality of tangible dollars in your hands.

Firstly, there is the trade types:. Here, the trader bets on the price action touching a chosen price level called the strike price, touch or not touching that price at all no touch.

There are variations such as double one touchdouble touch, etc. The price of gold can decide to trade within a price range formed by an upper and lower trend line. Whether this asset decides to stay within the tunnel so created inor break out on either side outis a matter for the trader to decide. A correct choice is rewarded. How about trying to decide if gold will end higher than the present price by the time the trade expires, or lower?

Another way for the trader to possibly make money. These are three possible outcomes that can translate into some cash to finance that shopping spree that has occupied your mind lately. Let us now help you along the way. Its daily pip movements are anywhere between 1, pips and 10, pips. The key is to get the direction right, then set an appropriate strike price and expiry date. If we get these three ingredients right, the trade will succeed.

First, we have to ask ourselves: Traders love gold because it is a safe-haven instrument which they can buy in periods of uncertainty. The answer is a resounding YES! Eurozone uncertainty was really bothering traders. When there is uncertainty, the price of gold only heads in one direction; upwards! So now that we had a direction, the next thing was to determine an appropriate strike price. An appropriate strike price has to be one which is achievable within the price range of movements for goldand which is not beyond a resistance point.

An expiry of one week was set as the expiry period. If gold is expected to be bullish, it should either Touch a bullish target, or Not Touch a bearish target. Based on these principles, we had two gold trades on 19 th October, and on 12th January, In the first scenario, we used a bullish gold prediction to predict a Touch on a strike price which was within reach, and it performed as we said it would.

This screenshot shows a No Touch trade for gold, where we used the principles we described above to say that gold was not going to touch a bearish target.

A very profitable trade it turned out to be. This is a summary of one of the ways to trade gold in the binary options market. There are other ways too, but if you master this method, you will make some good money. Binary Options Strategy for Trading Gold Prices This article is sponsored by OptionBit which is our recommended broker for trading gold with binary options.

Why Trade Gold through Binary Options? Firstly, there is the trade types: Trade 1 In the first scenario, we used a bullish gold prediction to predict a Touch on a strike price which was within reach, and it performed as we said it would. Trade 2 This screenshot shows a No Touch trade for gold, where we used the principles we described above to say that gold was not going to touch a bearish target.

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As far as the fundamental principle behind the trading of gold is concerned, it is due to the continuous change in the perception of gold as the ultimate store of value. After all, there is a finite amount of gold in this world and people believe in its value.

This is the reason that people invest in gold during economic downturn. During the European debt crisis that lasted from — , there was a lot of money spent for buying gold and consequently, it led to a huge rise in the price of gold. The perception of gold as the ultimate store of value has been there for centuries and it is not going to change soon. There are a number of assets being traded in the binary options market and gold is a popular asset as far as commodities are concerned.

The binary options markets provide retail traders a much less stressful and a lot cheaper way of trading this community. In the futures market, a retail investor not only needs a lot of trading capital but also high leverage and that makes trading a costly affair.

In other words, most of the retail traders cannot afford to trade in the futures market. Almost all the binary option brokers offer trading in gold on their platform. One does not need to worry about the contract size, margin or leverage. In other words, a trader has to buy at least this much contract for gold in the futures market. The price of the futures contract is determined by the cost of gold at that moment. The trading amount that can be upped as the trader gains experience.

In other words, binary options market allow traders to make huge profits that are similar to future traders but at a lesser risk and lesser cost. First of all, trader is required to open a broker account with one of the binary option brokers that also offer gold as an underlying asset for trading.

Once the trader has filled up the online account opening form, he or she will also be required to provide a proof of address and a proof of identity. The identity proof can be in the form of international passport or national ID card whereas the address proof can be in the form of a bank account statement or a utility bill. After account activation, the trader can begin gold trading on fundamental basis as well as technical basis.

Here is an example of technical trading made on underlying gold asset using various technical charts. The above chart shows the value of gold in a trading pattern. The chart, which shows a downside bias in a symmetrical triangle, can be used by the trader to wait for some time until the underlying asset moves beyond one of the trend lines. In this case, it is the lower trend line. Since this is a daily chart, the trade can be expected by the trader to last for some time.

Therefore, a PUT trade with an expiry of around 48 hours should be profitable for the trader. In the binary options market, traders are more likely to find trading opportunities using the technical trading setups shown above as compared to the fundamental trade setup. Gold Trading in Binary Options There are a number of assets being traded in the binary options market and gold is a popular asset as far as commodities are concerned.

Gold Trading Process in the Binary Options Market First of all, trader is required to open a broker account with one of the binary option brokers that also offer gold as an underlying asset for trading. Gold Trading Chart The above chart shows the value of gold in a trading pattern. Add Your Comment Click here to cancel reply.