There is no denying the fact that there are lots of people who earn huge amounts of money through commodities investments. This is a huge speculative market and can be quite volatile too. The most common way of trading commodities are options trading. This is extremely popular since it offers a way for you to earn a huge profit while risking a relatively small amount.
The only problem is that it isn’t as simple as you may think. You will also need a broker in order to complete trades for you. Getting involved in commodities options trading is quite expensive and that is where binary options enter the picture. They are a simple way of trading commodities. Online brokers don’t charge a commission and the minimum investment is quite low.
Let’s take the example of corn. It is a crop which is grown in the US in April and May and then harvested between October and November. The country isn’t only the largest producer of corn worldwide but is also the leading exporter. This is why it is very essential for anyone who is following future prices of corn to examine US crops.
There are quite a few ways in which you can choose the right option for you to trade on the futures market. For more information, you can search the Internet for detailed descriptions on how you can figure out the best option as far as trading futures is concerned.
Now, some information for you on binary options. They are relatively new as far as the US is concerned. They have been popular around the world for a while now though. The idea here is simplicity. Apart from the simplicity, they also offer excellent returns of investment as long as you can predict trends accurately. You can earn more than 81% worth of profit in less than an hour of trading.
Here are a few things that can influence the price of commodities. It would serve you well to read up about them:
Crops: Monthly reports at the beginning of every crop season are going to summarize the money as well as the type of crop that is expected to be planted in the upcoming season
Production: The report is released around the 10th of each month and gives up to date estimations on demand as well as supply of corn.
Gain stocks: This provides you with information regarding existing corn supply as well as any other gains through the US and around the world.
Here are a few tips to help you gain a better understanding of how you should trade commodities:
§ Summer is the most volatile time of the year for crops and is also the time when most of the trading takes place. Always look at the weather conditions through the Midwest for any indications for floods or famine.
§ Monthly crop reports are a very influential market mover and this will always relate directly to demand and supply.
§ Track the speed with which crops are planted during April and May. The later the dates of plants may be, the smaller they will be and this will result in a higher price for the commodity.
§ When a market is unstable, you should avoid purchasing any costly options.
How binary options work
Some people may say that binary options are nothing more than a bet. But the fact of the matter is that there are ways in which you can predict if the price of a commodity is going to increase or decrease in the near future. You could be looking at a week, a day, or even an hour to make this prediction. Once the prediction is made, an investment is placed on it.
You can choose between a call and a put option. You can invest minimal sums of a few dollars to thousands of dollars. You should understand that you don’t really purchase the asset at any point though. If your prediction is in the money (correct), you will receive an amount equivalent to 65-81% of your investment. If your prediction isn’t correct, you will lose 85-100% of your investment (yes, that is a lot!). It may be considered risky, but the overall beauty of the idea lies in its simplicity.