Commodities Trading

oil commodity

There are three categories of assets and one list of market indices available for you to trade on via the Stern Options trading platform. The commodities category includes: Coffee; Gold; Silver; Platinum; Crude Oil; Sugar; and Wheat. Commodities are my favourite category to trade on via binary options. This is because the inherent trends in the price movements for individual commodities are more regular and predictable.

What are commodities?

Commodities are basic materials which are traditionally bought and sold with commodities of the same type. The reason why commodities are regarded as basic materials goods is because they are brought to market in their natural state as mined or harvested from source (i.e., precious metals extracted from their ore; wheat from the field etc). Commodities are raw materials which are used to manufacture good and consumables.

Commodities have well-established markets with traders utilizing futures contracts to buy and sell these commodities. Markets have set minimum quality & quantity standards for different kinds of commodities. For commodities’ traders this means that if you buy and sell gold for example, you will have to do so per standard measure (e.g., ounces, kilograms for metals; bushels for wheat; barrels for oil) and there are minimum amounts of those units. This however is not the case for binary options. In binary options trading we don’t actually buy or sell anything physical.

Commodities for the Binary Options Investor.

You can invest as little as $25 on a single contract. Average profit levels are high for binary options contracts on commodity prices is in the region of 80%. The most sophisticated and yet the easiest way to invest anywhere, the binary option trading instrument means you can make a high level of profit from the commodity markets without needing a warehouse to store your sacks of coffee, sacks of wheat, or bars of platinum, gold and silver etc. A binary options contract is not a bill of sale or a certificate of ownership. It is a contract that ties the actual amount of your capital investment to the actual change in any given commodity’s market price strictly within a specified time limit. We don’t have to predict what the exact price will be, only whether it will rise or fall. Instead of buying and selling, you are predicting whether the market price will be higher or lower than the market price at the moment you make the contract.

What causes commodity prices to rise and fall?

Misconceptions about underlying causes of price changes, and of market volatility in general requires some explanation here. Understanding price trends on the commodities markets is crucial to a successful investment strategy. As with all asset prices, fundamental forces of supply and demand for any given commodity are key drivers of price change. As well as this, other fundamental factors include demographics, weather, trade flows, production quotas and import/export controls. The International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD), and the G20 Commodities Report, all agree that in the current situation commodity prices reflects the interaction of high consumption and demand, low inventory, dwindling supply and political affairs. An example of this can be seen in the decision by the 13 member countries of OPEC to cut production levels of crude oil. The policy was convened November 2016 in an effort to force this commodity’s price up in consequence of a reduction in supply.

Using Strategy.

The 2016 OPEC decision to cut production is a perfect example of a situation in the markets which binary options investors have exploited in order to make profits from price movements. Knowing that whenever the supply of a commodity is reduced its market price will definitely rise, some investors chose to make binary option contracts even before the final decision was announced. Basically therefore, because we knew beforehand that the price for a barrel of oil was set to go up, we made ‘’Call’’ (i.e., Up) contracts. It is a basic principle of economics today that if Oil’s price goes up, then a multitude of other consumer items also rise in price. A realistic binary options strategy will take advantage of this principle.

Knowing which assets are affected and when the influence might take effect is knowledge that comes with time and experience. But you are not alone where this is concerned.

Concluding comments.

The commodities market in general is a good place to begin investing in binary options. Profit levels are high and minimum investment requirement are very low.

Stern provides informational support and guidance to all of its traders. Information sources about asset prices is accessible to you on the trading platform itself. Each asset listed on the platform is accompanied by at least three different kinds of charts and graphs. These show you the past history of the asset price and naturally the current live situation. You can easily learn how to interpret price trends by referring to Stern’s free-to-use online training academy. Also, you can could talk to your Stern Options dedicated account manager about trends. Your Stern account manager is a members of a team of market analysts with hundreds of years of combined modern markets experience to share with you.

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