The modern financial market offers users a reasonably wide range of types of trading contracts. It includes classic “High/Low” trading operation with a fixed percentage of profit, Forex and contracts for difference FX/CFD, cryptocurrency assets, ETF, OTN and ICO tokens.

What investors and traders need to know about trading assets

When beginners are faced with such highly-technical terminology, there are some things that can be confusing for them. Even some experienced traders don’t fully understand some of the new trading assets. Some of which really haven’t been around for that long. That is why it is so important to clarify this topic, and that is what this article aims to do. We will go over everything that investors and newcomers to trading alike need to know about the wide variety of trading tools available. Let’s begin with the most simple kind.

Classic “High/Low” contracts

This is the most popular kind of trading contract. They are either referred to as classic contracts, or “High/Low”. Its name reflects its principle. Traders place trades on the decline or on the growth of an asset, then conclude the contracts with fixed levels of profit. If the forecast is correct, then the investment funds are returned to their account, as well as with any profit. In the opposite case, when the forecast fails to be realized, their funds aren’t returned.

The defining attribute of this kind of trade is the starting and ending price difference isn’t of any importance. To put it simply, it doesn’t matter how strongly the price moves from the point of market entrance. In the situation of a profitable outcome, the end result is the same regardless of if the rate moves 100 points or just 1, so long as the direction of movement was forecasted correctly. Trading futures has a similar principle, they are the predecessor to this kind of contract.
“High/Low” trades are typically profitable about 80% of the time. Binomo’s trading platform offers users profitability up to 87%, with an average range of between 82% and 85%. If you compare that with classic investments, for example in cryptocurrency, then trading on the futures market enables you to earn more profit in less time. The minimum duration of one trade is only 30 seconds, with a maximum of up to one year. On Binomo’s platform, the maximum expiration is set at 60 minutes.

The advantages of classic “High/Low” contracts:

● fixed levels of profit;
● high returns on investment;
● ease of use, as they don’t require traders to calculate the intensity of the trend;
● no commission, spreads, leverage or margins;
● universally applicable, as you can trade with any asset.

From the point of view of Forex traders, the fixed profit levels are seen as a disadvantage. However, in that case, it is worth considering other types of trades, CFD, for example, which we will go into later. Nonetheless, in the eyes of typical traders, especially beginners, there are no real disadvantages to “High/Low” contracts.

Trading on Forex

The interbank market, Forex, has become for all intents and purposes the first stop in the world of publicly-accessible trading. Before, only very wealthy people could trade on the exchange, but now, thanks to the spread of the internet, it is accessible to anyone who so desires. Forex is a market where you can generate profit through trading currencies.

Growth principle. The trader concludes the contract from the dealing center, which the trading platform provides. You trade from there. You place trades based on a forecasted increase or decrease. However, unlike the classic “High/Low” contracts we described above, Forex trades don’t have fixed conditions.
The profit is measured by calculating the asset price the moment the trade was placed to the point when the order is closed.

For example, if a trader placed a trade to buy the EUR/USD, with a $100 dollar investment, then later when the rates rose from 1.10 to 1.20, they would earn $9 dollars in profit, because the rate rose 9%. This example helps to clarify the principle. In reality, the volatility of assets is lower than that, so traders invest serious amounts of money by using leverage to generate considerable profit from seemingly insignificant price fluctuations.

What traders need to know about Forex

There are several nuances that traders should be aware of about Forex. In particular, there are two courses, bid and ask. The difference between them is called the spread. Trades forecasting growth (bid) placed based on the value of ask and those forecasting decline (ask) on bid. The trade is placed at one price and closed at another. For example, if you bid, then your entrance to the market will be at the asking price, however, it will be closed on the bidding price. This particularity explains the fact that all Forex trades from the moment they are placed are by default less profitable.

There are also an array of principles that any trader on Forex needs to understand.

Let’s go through the meaning of these principles.

● Currency swap. The commission for transferring open positions to the next trading day. Unlike classic “High/Low” contracts, you can’t feely hold open positions for a long time on Forex. If the profit of the contract isn’t fixed prior to the trading session closing, then the dealing center takes a specified commission because they will actually have to replace the trade.
● Leverage. Leverage is used as a means to trade with funds that exceed your actual balance, in reality, it is a loan from the trading platform. The coefficient could be anywhere from 1:10 to 1:1000, the more balanced decision is 1:100, it is used the most often by investors.

● Margin. These are funds that the dealing center take from actual deposits from users placing trades using leverage. The higher the coefficient, the higher the fee. It is directly tied to the level of risk the trader poses. The higher the margin, the higher the likelihood that the trade will be closed by a stop loss. If this isn’t put into place, the entire deposit could be lost. This can be caused by even small price fluctuations.

Contracts for difference (CFD)

We planned from the start to give an overview of Forex first, as this kind of contract has a lot in common. CFD contracts work in the exact same way. Therefore, there is no point repeating, and it would be wise to skip to explaining the differences between them.

● On Forex you can only trade currency pairs, with CFD you can trade any asset, such as goods, stocks, indexes, cryptocurrencies and so on.
● You can gain access with minimal investment, much like Forex. However, here you have cent accounts that are separate from the dealing center, which are organized into trading lots (10,000 or 100,000 base currency units).
● They are very accessible. Forex is strictly confined to trading sessions, but contracts for difference can be traded at other times as well. For example, you can place cryptocurrency trades through Binomo at night or on weekends.

Trading FX/CFD is typically available through trading platforms that primarily deal with the classic contracts explained above. This makes platforms more attractive to traders who view fixed term trades as a negative, not a positive.

ETF Trading

ETF is an abbreviation for Exchange Traded Fund. It has a lot in common with mutual investment funds. The main difference is that ETF assets are traded freely on the exchange and have the same characteristics as other assets. In particular, unlike mutual funds, they can be traded using leverage. Therefore, the potential profits are increased, however, this increases the risk as well.

Put simply, ETF is a private investment fund, where investors place their own money for a certain percentage. A certain number of assets are released by the fund manager into free circulation on the exchange. And traders can perform operations to buy or sell after evaluating the perspectives and risks of each individual fund.

Moreover, the structure of ETF is binary. There is a clear division between the primary market, where the assets are released and circulated, and the secondary, where they are used for speculative operations. This not only attracts direct investors, who actually invest their funds in the exchange-traded fund but traders as well.
OTN, the next stage of cryptocurrency growth.

The Open Trading Network (OTN) is an international project aimed at taking the cryptocurrency market to the next level. Its conceptions can be explained briefly as a re-organization of the crypto industry. The platform aims to combine all of the existing Blockchain-based cryptocurrency systems.
This technology would address the majority of problems, such as those faced by Bitcoin. The main advantage to Open Trading Network is that the system has considered the interests of all parties involved, those of private individuals (users), investors, organizations, regulators, miners, traders and so on. This project is a very interesting topic in its own right, however, this article is focused on clarifying the different kinds of trading tools. Therefore, we will consider OTN from the point of view of the trader.

Trading OTN tokens is similar to trading normal assets. However, some improvements have been made. The process is more user-friendly and secure. In particular, the number of available tokens for traders is determined by calculating the amount they have spent on commission. The project was released thanks to IQoption, a trading platform that offers OTN as a normal asset.

Trading cryptocurrencies and ICO tokens

Cryptocurrencies are the more innovative direction of modern trading. The majority of trading platforms already offer this type of asset. For example, on Binomo’s platform, you can not only trade BTC/USD and LTC/USD but with a crypto index as well. Its course is charted by averaging the rates of the 4 leading cryptocurrencies and ICO tokens. CRYPTO IDX has become a favorite among users because it allows traders to conduct technical analysis on minimal chart intervals.

Cryptocurrencies are a new type of payment system based on Blockchain, a fundamentally different transaction system. Cryptocurrencies offer many advantages to your average user, according to opinions online for both miners and traders. Cryptocurrency assets offer the following benefits:

● The ability to trade round-the-clock, as the cryptocurrency market doesn’t close at night or on weekends;
● High liquidity and the corresponding volatility, the liveliness of the crypto market allows for higher profits;
● Technical analysis works well on them, allowing for highly accurate forecasts.

ICOs are a type of crowdfunding. This is when the creator of a new cryptocurrency project releases a specific amount of crypto coins early, which can later be exchanged for the cryptocurrency after a successful start. If the project fails to gain traction, then the exchange doesn’t happen and the investment won’t generate any profit. This is why ICOs are relatively risky endeavors to invest in, and it is fairly difficult to evaluate prospective projects, especially for beginners.

Conclusion

The market offers investors and traders alike a wide array of ways to earn a profit. That being said, it is recommended that beginners start out trading with classic contracts on futures markets. You can gain entrance to the market with minimal investments, or gain some experience instead without any cost by trading on a demo account. Binomo is one of the leading companies in the industry. It has been around for over 4 years, is officially certified by the FMRRC and has a good reputation among its users.

TRADE CRYPTOCURRENCY

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

What investors and traders need to know about trading assets
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