Profit from Indices

Profit from Indices

Before the advent of binary options trading in 2008, if an investor wanted to trade on a market index he or she had to spend a lot of money on commissions hiring the services of a broker. Stern’s platform has made all that expense un-necessary, as well as the reliance on other people to make decisions for you.

The Stern Options trading platform enables you to invest in four categories of asset: (1) Stocks; (2) Commodities; (3) Currencies; and (4) Indices. There are 20 global market indexes registered on Stern’s trading platform. Including, the S&P 500; Nasdaq and the Dow Jones which are all in the USA; Japan’s Nikkei Index; the Hang Seng in Hong Kong; London’s FTSE; Germany’s DAX; and Moscow’s MICEX Index.

What are indices?

Financial market indices are indicators which record a statistical measure of actual change in a securities market. For financial markets, each index consists of a portfolio of securities which are representative of a selective market or part of the stated market.

When we read or hear in the news media that ‘the stock market is performing well’, we understand that the idea of ’’performance’’ corresponds to the market index figure rising. By definition, the index is a weighted measurement of the average performance of a selected group of assets. For example, Standard & Poors (S&P) 500 is an index of five hundred assets.

What are Securities?

Securities are investment instruments that are issued for public offer by companies and through which companies raise capital. A security is therefore a financial instrument representing ownership of a stock or bond that has some kind of value.

A Binary Option Strategy for Profit from Indices.

The best way to start for newcomers to binary options is making profits from indices. This is because indexes move with less volatility than is the case for the other categories. Less volatility means for you the investor that it is easier to predict the direction the index will move. When we make a binary options investment on a specific asset, we are making a choice based on a belief in whether the asset price will increase or decrease by the expiry of the contract. The principle holds true for the category of Indices, only it is not the price of the asset but the number (i.e., the point total) that the Index stands at at the expiry of the contract. Before we make a binary options investment on an index we need to decide if we can predict the direction it will move, up or down!

What are the factors affecting Index movements?

An index reflects the performance of its constituent stocks and bonds. In general we should consider the following factors:

Consumer Sentiment – is derived from surveys concerned with what consumers feel about the performance of the national economy. If consumers are feeling more optimistic, they will spend rather than save their money and this results in turn with a boost in fortunes of the corporate sector.

Credit Rating Downgrade or Upgrade – credit rating agencies issue periodic reports stating their considered assessment of a company’s credibility and performance, and these ratings statements have a knock-on effect on the price of a company’s stock, which can increase or decrease therefore based on where the credit rating is an upgrade or downgrade.

Crude Oil Prices – The price of oil is very important to a company’s profitability because it represents a cost factor variable, and impacts on all sectors of the economy.

Labour Data – Unemployment figures are regarded as an indicator of the state of the economy, and therefore, when figures are released to public information there can be a knock-on effect upon confidence in markets and thus indexes.

Gross Domestic Product – GDP figures indicate the monetary value of the goods and services produced by an economy. When the GDP figures increase it means prosperity and a growing economy, and vice-versa.

The advantages of investing through the Stern Options platform.

The relations involved between the considerations in this list might at once appear very complex, but don’t worry because Stern’s online trading platform is equipped with a set of binary options measuring and monitoring tools that you can use to simplify your decision making. As well as this, Stern maintains a comprehensive economic calendar on its website which is an important tool to use whatever kind of binary options investing you are doing. The calendar gives you the power to predict events before they happen. Therefore putting you in a much stronger position as an investor.

How much profit can I make?

Profit levels for binary options investments are always high, averaging at 80% for intra-day investments. But there are special binary option formats such as ‘One-Touch’ options where the profits range between 100% and 300%.

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