Trading is a sum of many elements like individual skills, the choice of the trading strategies, technical analysis tools and the right broker. The list is long, but the one thing you cannot forget is the financial instrument being used.
You will find many types of assets. There are, among others, stocks, indices, currency pairs. Each one possesses its own characteristic. Traders need to research different instruments to find what is best for them at a particular time.
If you are interested in digital options trading, you can basically choose any asset provided by your broker. However, some are better than others. The offer is sometimes extended to some exotic commodities like coffee or wheat. But we will focus on the most popular ones that you can find almost on every platform.
Typically, the assets chosen for digital options trading are:
- currency pairs;
- shares of companies and stock indices;
This can be considered to be the most popular kind of a trading asset. Currency pairs are based on two different currencies that are set against each other. Like in the most famous EURUSD currency pair, the euro is against the dollar. So-called rate or quote indicates how many US dollars you can buy with one euro.
The EURUSD is the most popular currency pair, but there are plenty of combinations. You can literally couple any currency of your choice. In options trading, however, the combinations from classic exchanges are normally used. The rates are obtained by the brokers from official sources.
Choosing currency pairs gives many benefits like the wide offer, volatility and the possibility of applying various trading strategies. This is why currency pairs are the main product offered by practically every broker. Most users will be pleased to choose this asset.
High volatility encourages the opening of multiple transactions in a relatively small period of time. The expiration can be set for less than 5 minutes. Moreover, it allows for applying a variety of tools and strategies. There is, for example, a strategy that requires opening two cross trades. After a short time, when the situation on the chart is developing in a determined direction, one of the position is closed. The loss will be compensated by the gains from the second trade.
Another strategy is based on the fact that the markets are very responsive to news releases. Fortunately, you do not have to spend many hours searching for the important news that is connected to the currency pairs you are currently trading. There is often a tool called the Economic Calendar or similarly, that allows you to see very clearly what and when will be announced. It includes historical data as well. So it is enough you follow the calendar and trade accordingly.
Technical analysis tools can be successfully applied to the currency pairs charts. They are often giving high valuable signals to enter the position. While trading based on these signals is a good idea, you should not forget to check occasionally what is going on in the world. This means that it would be a good idea to follow the Economic Calendar, in addition to the signals method.
Commodities go back to the old times of real good exchange. In this category, you may find fuel, grain and sometimes precious metals like gold, silver or oil. There are special strategies to use only when trading precious metals.
The price charts are just partly adequate. There are often downtime periods with consecutive strong rises. It can be easily observed, particularly at small intervals. Commodities are selected by the traders who implement basic market analysis methods. They still create many trading opportunities. The situation of the big companies related to the particular commodity should be carefully studied.
Many factors have to be considered to trade raw goods successfully. For example, the food will be very seasonal. Trading such commodities requires some amount of knowledge and experience thus, is not recommended for the beginners.
Shares of companies like for example, Apple or Microsoft are pretty popular. Such assets demand from the trader to follow all the news about a specific company. This will help in predicting future trends.
In classic stocks, you can only earn when there is a rise in the price. But in digital options trading, it is possible to make money on both, increase and decrease in the price. A trader’s task is to predict the price movement and he gains a profit whenever his predictions were right.
The least popular assets are the indices. They are not a good choice for the beginners as they require to understand very well the country’s economy and to explore the nuances of the specific product niche. Indices reflect the approximate value of a combination of indicators in a given field.
Cryptocurrencies have gained popularity during the last few years. The brokers had started to include them in the offer, as well as to introduce a possibility of depositing and withdrawing money via crypto wallets. You should be able to trade Bitcoin, Litecoin or Ethereum without any problem.
Cryptocurrencies are characterised by high volatility and so there are quite a lot of opportunities to earn some profit. They are not under the direct influence of the country’s economy. Naturally, it has some effect, but what is more important for the price of the cryptos are population needs. So the price is regulated by the demand on the market.
The traditional analysis tools cannot be applied without any modifications. Small intervals, for example, should be avoided. But you can start from medium length intervals. Use some technical analysis methods designed for this type of the market, and you can trade cryptocurrencies with success.
Always check what your broker has on offer and get to know the market well before you invest real money.
Wish you success!