To the uninitiated, speculative trading in commodities and financial instruments is difficult. This is true of all assets, including currencies and cryptocurrencies. To those vastly experienced, however; speculative trading, is a fascinating, if highly risky, exercise.
The emergence of technology created binary options and crypto trading and also helped to advance old markets like foreign exchange and commodity trading. Consequently, these investment options are expanding as more people all over the world have access to them.
What you need to know about Binary Options, Cryptotrading, Forex, and Commodities
Binary options: binary options are like predicting the outcome of a football match. The difference is that you are presented yes/no or win/lose (binary) options that expire with time. The prize for the outcome is fixed as the trader either wins all or loses all. It is also called a Fixed Return Option and all-or-nothing options.
Binary options bet against the prices of commodities and the value of currencies. For example, a buyer can bet that the price of oil will increase by 20 per cent before 10 pm today. If the prediction happens, the buyer wins. If it doesn’t, the buyer loses their investment completely. Forbes calls binary options “gambling”.
Crypto-trading: crypto trading is the buying and selling of cryptocurrencies like Bitcoin and Ethereum. Crypto trading has a striking semblance to forex trading. But unlike forex, crypto trading has automated trading platforms. Also, crypto trading platforms use trading software like bots to handle exchanges seamlessly.
Forex: foreign exchange or currency trading is a global market for trading the currencies of the world. It is the largest and most liquid market in the world, with over 5 trillion dollars exchanging hands daily. Forex involves pairing two currencies and selling one for the other in anticipation of an increase or drop in value. A forex trader makes a profit from fluctuations in the value of the paired foreign exchanges.
Commodities: commodities trading is as old as the planet. For centuries, humanity has engaged in large scale buying and selling of farm produce and raw materials like grain, precious metals, oil, and other commodities. The commodity market exchanges raw materials and manufactured goods, it is highly regulated, and many people find it complicated to understand.
Analysing the Risks and opportunities in speculative trading
Speculations, generally, are risky and not made for the faint hearted. Forex, binary options, crypto trading, and commodity trading are all highly volatile with fluctuating prices. In forex, it's said that 90 per cent of retail traders will lose their entire account balance within the first six months of trading. Binary options have a similar story to tell. Aside from this, forex observers describe crypto trading and binary options as Wild West with regulations copiously limited. The absence of regulation adds to the financial risks of investing in these products.
Nevertheless, the share size of the forex market, at 5 trillion dollars, is a clear indication of its profitability. Likewise, the crypto market’s value is rising, and widespread adoption and looming regulations are pointers to a bright future. Similarly, binary options and commodities market are getting more profitable. As trading platforms and trading software advance, these markets will continue their upward trajectory.