Metals as a financial asset for stock-exchange trading were considered as perspective and high liquid trading tools at all times. Their popularity is supported by the limitation of this natural resource, using as “a shelter” at the time of the collapse of the foreign exchange market, constantly growing demand for them from central banks and widely using in industry, and also in other spheres of people’s life. All enumerated factors promote constant growing of the value and popularity of this stock-exchange item.
On the screens the growing of gold and silver quotes during the last 15 years is depicted. As you see, the value of these metals is in constant growing, but the liquidity at the moment goes off-scale. The amplitude of motion of gold quotes for 1 trading week can change the range of more than 1500 points..
As it has been already mentioned above, very often the main market participants use metals to diversify their own trading risks. So, at the time of quotes fall of currency, investors “hide” their capital by buying valuable or nonferrous metals.
Why are metals chosen as a way to diversify risks? Because:
- demand for above mentioned financial assets is constantly growing. Nowadays, metals found their use in different economics branches (heavy industry, light industry, bank sector, it lets get profit in long-term outlook and local price cycling.
- there is a close relationship of valuable metals with foreign currency funds of different countries. We won’t forget that in a lot of countries there are gold and exchange currency reserves, which provide the stability of exchange rates steadiness and purchasing power of national currency. Thus, considering all this, considerable reduction in price of the given primary resources is not possible.
Binary options for metals
As a matter of fact, every trader, trading in stock-exchange market with his web-terminal, is full rights market participant. He, like all the others, invests his own money in financial markets. However, as for metals market, it is a very difficult moment to get this kind of primary resources. In fact, a trader doesn’t buy this product, during trading operations by binary options in the metals market. Metal options, seeming so simple in trading, are rather difficult kind of trading form the technical point of view. So, unlike currency or stocks buying, option buying gives its owner the right to sell or buy this asset in the future – in some time. Thus, not an item is sold or bought, but only the right to close deals with this item in certain time and in certain price.
Let’s point out the following characteristics of metal options:
Strike price – it is used, when an investor, at the time of closing a deal by binary option, indicates the price level himself, and this level must be reached by the asset value during certain period time, or such price levels are indicated for the investor by sellers or middlemen (brokerage companies). The size of profit depends on the exactness of prognostics of the mentioned levels.
A type of an option – PUT или CALL. PUT option gives to its owner the right to sell the option, but CALL – gives the right to buy it. But, the choice of option type in every situation will depend on the real market situation. If, according to the carried out fundamental analysis, the price of metal (for example gold) must grow, in this case an investor buys CALL:
If the price of metal (for example metal) must go down, an investor sells PUT:
The expiration date – this is fixed time, when a trader can (from the technical point of view of exchange trade) use the right to sell or to buy of the given primary resource item. In a trader’s terminal it happens by fixation of profits and losses.
Strategies of trading of metal binary optionsAs a rule, this financial asset is used by more professional stock market speculator for the following types of trading:
1. Risks diversification via metal buying as a guarantor of your own capital safety;
2. Purchase and sale of metals according to fundamental prognostics of rise or fall their value as a result of the following factors:
- development or fall in economics and its separated sectors, countries – the biggest getters, producers of the given primary resources (for example – Australia and New Zealand);
- development or fall in economics and its separate sectors, countries – the biggest consumers of the given primary resources (for example – China);
- getting of the information about gold and exchange interventions of countries, which are done to stabilize national exchange rates.
- indicated trading strategies are signals of purchase, which traders get according to analysis of technical indicators about changes in tendencies in price motion of metal quotes, entries the zones of rebuying-reselling, divergence-convergence and so on;
- mathematical trading strategies – are gridded trading systems, systems on the basis of martingale methods;
- trading on clear diagrams with the help of analysis of graphic patterns according to Price Action technology.