Stock binary options are a class of binary options which are traded in the digital option market. Stocks usually constitute the largest asset class in this arena, and a binary options broker will usually list stocks from equities markets all over the world. We see markets in the US, Europe, Asia and the Middle East contributing equities listed on a digital option trading platform.
The US stocks are the most popular. Their digital option stocks are also the most widely traded. The US exchanges command so much money that they are usually used as the global benchmark.
Brokers have a geographical spread, and some brokers will prefer to list more stocks from one exchange or one region than others from another region. Some option brokers such as AnyOption actually list equities from several regions liberally. With such a wide spectrum of equities to choose from, traders could get overwhelmed when it comes to trading choices.
Trading stock binary options requires that traders must take certain factors into consideration:
- What stocks is the user conversant with? It is good practice to only trade stock binary options that the trader is conversant with. This means if you are more conversant with US option assets, then stick with them. The money secret is not in the number of assets traded, but in the use of a strategy that works.
- There are certain trade fundamentals that affect every stock in the markets, and these can form a basis of trading stock binary options. Some of these fundamentals are economic sentiment by traders/investors, earnings reports, economic news data on employment, manufacturing and inflation as well as policy statements. Other important company-specific news such as launch of a new product with the potential to increase earnings, mergers/acquisitions, hiring or exit of executives, etc., will also affect the price and trading value of an equity. Certain news can spur or spook the markets, and traders also need to know which markets are the most watched.
How to Trade Stock Binary Options
Naturally, the first step starts with opening a trading account with a binary options broker. The option broker you choose should be one that offers the trader’s preferred asset selection. This can be ascertained by looking at the range of assets on offer.
The next step is to make a choice of what stock binary options to trade. The range of equities should be one the trader is familiar with. Certain characteristics of the asset chosen for trading purposes should be known. For instance, the period of release of earnings should be known. The trader should also have access to a news sticker for the latest news in the market. Equities also have a correlation with forex, so listening to forex-related news on Bloomberg as well as gaining access to forex trading news websites like forex.com will definitely help the user trade profitably.
The option trader should make an attempt to study market correlations. Know how forex news affects digital option stocks or how something happening in the commodities arena will become relevant in setting up a good trade.
Finally, make a sound digital option strategy and stick to the trade plan. These are the nuggets that will produce trade success in the markets and add more profit to the account.