Gold Strategy for Binary Options
It’s been a long time since gold was the standard against which our currencies were measured, but gold is still sought as a safe haven in times of economic stress. Anything from the threat of war to an economic crisis can send investors running for the safety of gold.
It is the classic hedge against inflation and the one way that investors can protect the purchasing power of their financial reserves. This is why gold prices usually rise as economic growth in countries slows, particularly countries like the United States, the EU and China.
Because of the sensitivity that gold has to the prevailing economic conditions around the world, it is a great commodity to speculate on and therefore becomes an ideal vehicle for binary options trading.
Factors That Affect Gold Prices
The central position that gold holds in the world of commodities means that it is affected by the prices of virtually all the other important commodities. It is also affected by the states of the large economies and the political and economic relationships that the important powers in the world have with each another.
Inflation levels, interest rate policies, oil prices all impact on the cost of mining and transport which in turn drive up the price of gold. Upward pressure is also put on the price of gold as demand for industrial and decorative purposes climbs.
Why Trading Gold with Binary Options Is an Excellent Choice
The price movements in gold can be extreme. This volatility can fuel fluctuations of up to 25% in one trading session. Translated into a pips value, it can generate between 1,000 and 10,000 pips a day. In other words, it is a highly profitable commodity to trade in binary options, because there is always something happening that will affect the gold price.
Another point to remember is that with binary options, you are not trading the hard metal. That is a completely different business. With binary options, you are only betting on the price fluctuations. You aren’t hoping to own the actual commodity.
When trading gold binary options, there are a few basic points to remember. The metals volatility is the engine that will drive your profits, but it must be factored into your strategies.
Your research, knowledge and skills must be focussed on identifying trending directions and then establishing safe expiry dates and strike prices. Depending on how the market is trending, your strike price must be either below the current resistance level or above the current support level.
With this established, you have to pay particular attention to how much the gold price is moving or fluctuating. This critical to setting your exit points.
The usual binary trading strategies work as well for trading gold. The difference lies in the metals price volatility which creates more opportunity for profitable trading than other commodities. In fact, it is a great way to diversify the securities you trade in and to generate capital to trade with. You can take advantage of the price movements without having to invest in gold futures.