When most people think of equities, commodities, currency trading they think about buying playing the market. And certainly this is the most common way that most investors interact with equities, commodities, and currencies. But perhaps the smartest way for investors to interact with these assets is through options trading.

Options are contracts

Options are contracts that provide the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date. Options can be purchased based on where you believe a stock will move by that date. A call option is the right to buy and a put option is the right to sell, Unlike a future of forward contract where the holder of the contract has both the right and obligation to buy or sell at a certain date, an options contract does not carry the same obligation, which is precisely why it is called an option.

Options trading is complicated

Options trading can be very complicated and involve a host of factors, each of which need to be considered when making an investment. For the average investor options are formidable, and present and investment opportunity that requires a lot of additional knowledge. For this reason, many unsophisticated investors do not participate in options trading. If you have a desire to participate in traditional options trading, the best advice is to take a course to teach you the ins and outs of the business. There are many great courses available some of which are online that require a little money and a lot of time, but they produce wonderful results.

Consider binary options

Binary options present a much less complicated way for investors to trade options. They are simpler because they only require a yes or no or binary choice. A binary option automatically exercises, meaning the option holder does not have the choice to buy or sell the underlying asset. Pros in the field of binary options like Jean-Yves Sireau use their simplicity to make profitable trades on binary trading platforms.

Understand what makes markets move

At the core of your being successful is the ability to pick the direction that the assets you are trading will move. Typically, they will move based on fundamentals, news about the asset and the industry, and general data about the country and the world. But if you only use these factors to determine if and when stop remove and in which direction, you probably wouldn’t be very successful.

What you also need to understand are the intangibles that will vary from stock to stock. These might include whether a prominent stock broker or analyst thanks the stock is over or under priced, if the stock market itself is moving up or down, or if investors are getting edgy because of the stock making a large run one way or the other. Combining these intangibles with the fundamentals can create a better read of where the stock might be going. So you need to understand how to use all of these factors when assessing trades.