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§3.2 How to select an underlying asset

товарные активы

What do you need to focus on when selecting an underlying asset? Statistics show that various assets require very different strategies because every asset has its own special features. It means that you can’t select an underlying asset thoughtlessly because your choice determines your final success.

In our experience, it would be better for a trader to select currencies for trading if he is going to trade in small hourly time frames because:

  • Indices trading require a good understanding of why and how indices form which is rather difficult to perceive for beginners.
  • trading shares and commodities require a lot of time in most cases as it takes long for prices to have substantial changes.

A few words about commodity assets;

It is worth noting when speaking about commodity assets that gold, for example, is an asset with which prices rise when markets are unstable. This is usually true when currencies or banknotes lose a lot of value and people prefer to buy gold whose value remains stable. That’s why it is rather easy to make forecasts if you trade on the gold chart during negative events of various kinds such as defaults, revolutions, wars and natural disasters. All these events almost always result in higher gold prices especially if the dollar or euro significantly falls at the time.

Another feature of commodity assets is oil.

Another feature of commodity assets is oil. As a rule, a rise in oil prices leads to higher gold prices and a fall (not sharp) in oil prices results in lower gold prices. This mechanism has been proven by multiple price fluctuations and may be used to a trader’s advantage during options trading. It has been mentioned however that gold prices are not active and change very slowly in short time periods but on the other hand, a binary options trader doesn’t need gold to increase by 100 points. It is necessary that the price of an option should change by at least one point, during a predetermined time. It follows that the asset can also be used.Besides gold you can trade other assets such as oil and silver. Truly speaking, a great deal depends on how things are going with producers and many other factors and that is why you need to have a very good strategy if you really want to profit from the trading.With regards to the highest and lowest price of silver, gold and other commodity assets, as a rule, they don’t fluctuate strongly and every 2-3 months prices reach both top and a bottom levels. Therefore, the assets are good for traders who trade on significant but not hourly time frames.

§ 3.3 Currency assets trading →