The binary options market gives a chance to people to trade gold in a strictly controlled environment with low risk of a huge loss, smaller margin requirements and less trading capital needed. It is not unusual for the gold to roll back by almost 1000 pips against your position before it decides what you need it to do.
The loss of the trader is restricted to the cost of the trade. Here is an example. If the trade behaves as you want it to, you will get your cost back and even win some extra. It can be up to 80% or if you have some experience and know how to play right – up to 500%.
Of course, trading gold is not for traders without experience and there are some things you have to consider before your start investing. First of all, there are a couple of different trading types:
Touch/No Touch
In this type the trader bets on the price action by adjusting a chosen price level which is called strike price (touch), or not touch that price at all (no touch). There are, of course, different variants such as double touch, double one touch, etc. The trick here is that you have to make sure that the chosen behavior of gold will occur in your favor before the expiry date.
In/Out
You have to know that the price of gold can decide to trade within a certain price range which is formed by upper and lower trend line. So whenever the asset decides to stay within the tunnel (in) or breaks out of it (out) – it is a matter of your choice.
High/Low
Decide whether the gold will end higher than the present price or lower. This is the basics of high/low type.
Factors Influencing Price of Gold
Here are the factors that are influencing the price of the gold
Central bank involvement in the gold market.
Industrial demands for the metal
Investors (speculation and stockpiling)
Mining companies (production outputs)
Demand of jewelry
Political factors (war, national macroeconomic policies, economic emergencies). The political factors like national policies to either increase or reduce gold reserves or use the gold as any form of currency are also important factors that pull on the prices of gold. Those factors as well as the demand for jewelry don’t account for the prices situation on daily basis.
Central banks are also playing a pivot role when it comes to determination of gold prices. The reason for this is because they stockpile gold reserves on behalf of the governments of their countries.
As for the demand of jewelry – it accounts nearly 1/3 of the gold utilization. The citizens of many markets that are emerging – Russia, Brazil, China, South Africa, India, are getting richer and people do love golden objects. And since there are also lots of rich people that can afford jewelry, the demand is expected to continue growing which will definitely put pressure on the prices of gold.
Investors love gold because it is one of the safest ways to trade and it is a whiff of global economic instability. Because of the huge gold investments, gold prices were pushed to record highs during the last couple of months making the best binary option asset for trading.
And the final factor that we can’t forget to mention is the effect on production outputs by all those mining companies. For example the mining industry in South Africa has been hit by strikes in the last months and this has limited the output, which automatically forced the prices to go up.
The Best Steps for Beginners
And since we mentioned beginners, probably the best thing you can do in such case is to accumulate all types of details and interpret the information with the help of your instincts rather than relying on trading signs or information from different sources. Here are a couple of steps you might find useful.
1. If you don’t feel like losing a certain sum, then don’t risk it.
2. Cash management is one of the most important things you have to master. Trading requires gains and losses and the ability to generate huge profits will come after learning to take a few defeats.
3. Endurance is also important. Begin with moderateness until you feel confident you are ready to make the next step and trade with the option you have chosen. If the odds are moving around in a favor of yours, don’t hesitate to take your chance.
4. Always be mindful of your work activities and schedule.
5. Don’t forget to keep a record of every single trade you have performed. Study on your loosing and winning later and improve your overall performance.
Another thing you might want to pay attention to is the trading signals, so we will cover this topic in the next couple of lines, but remember it is not recommended to use such signals if you are a beginner.
Where to Find Trading Signs
One of the most important things you have to master is learn how to find trading sings. There are lots of online programs that provide such signs, there are also another type of independent programs that are offering free signals, but one thing is crucial for you – make a thorough research on your software before start using it because the effect might be negative.
On the other, hand if you don’t feel like downloading such programs, there are a couple of trusted and popular sites that can provide the trader with sings. However, those sites are not free and in most cases require monthly bill. The best thing you can do is to join at least two such sites and compare the signs.
When to Use Trading Signals
The whole concept of trading signs is a bit new in the binary trading industry. Interesting fact is that the signs are used more often by veteran traders rather than beginners. Remember, don’t use such signs if you are a beginner because the results might be catastrophic. The best practice for a new trader is to spend lots of time making his own researches – that will teach him a lot about binary options and how to trade with them.