To get started in the world of trading, traders must first find the most suitable asset for their future investments. The characteristics of the product to be traded, but also market movements are, among other things, the main points to consider before opening a position. Thus, particularly for beginner traders, professionals advise to opt for assets that are not too complex and whose market trends are rather easy to “guess”. As a benchmark index on the Paris stock exchange, the CAC40 is particularly advantageous in binary options. Why is this? And how can you optimise your chances of winning? The details..
Binary options trading
Binary options, which appeared in 2008, are now one of the most widely used means of speculation on the stock market. Trading with this type of option is very easy and many individuals, including novice traders, do not hesitate to invest in it. The transactions consist, in a global way, in predicting the direction of the price of an asset before a predetermined deadline. Tradable products include, in principle, Forex currency pairs, shares of international companies, commodities, as well as stock market indices, including the CAC40.
Different options are possible depending on the broker’s offers, allowing, among other things, simultaneous trading of products or the choice of expiry periods ranging from a few seconds to more than a month. It is then up to each trader to take advantage of the available functionalities, which are more and more numerous since competition between brokers has greatly increased on the market. Some binary options brokers offer, among other things, opportunities to increase profits with the One Touch option. By estimating whether the price of the product will be able to hit a value only once, this type of option allows you to make profits of up to 500% of your initial bet.
The many options and trading tools available in the market make it easy to speculate in binary options. It is not uncommon, moreover, for a novice trader to make substantial gains with this type of stock trading. However, despite such simplicity, the estimation of a bullish or bearish trend is still based on market trends and it is essential to know how to bet on the right product in order to come out a winner. Thus, for those who are new to binary options, experts are betting on the CAC40 as a starting point.
CAC40 index: favorable market conditions
For several years now, stock market indices, including the CAC40 in particular, have been rising almost steadily on the market. One of the main reasons for this is that the major international central banks generate large cash flows on the financial markets. Every month, billions of dollars are poured in by the Central Bank of Japan, the Bank of England, and the Federal Reserve Bank of the United States, which is the central bank of the United States. These monetary policies automatically influence the world stock market and impact in particular the trend of the CAC40.
This stock market index, which is one of the most important on the Paris stock exchange, has been subject to a virtually permanent upward trend since 2012. In particular, a 30% increase in its share price was recorded in 2013. For traders, this is an opportunity not to be missed to carry out stock market transactions. Especially in the case of binary options, this market situation is very favorable for them to make easy profits. All they have to do is guess whether the CAC40 will be down or up in a given time frame. Of course, despite the simplicity of the practice, one must not forget that in stock market speculation, there are always risks. Even if most traders bet on buying a call, some may opt for a put, depending on their analysis of the market.
Elements for good speculation on the CAC40
While the CAC40 has significant market potential, certain techniques need to be applied in order to really benefit from it. The choice of a “Call” or a “Put” should not be made randomly, but should always be based on market movements. Fortunately, what is easy with the CAC40 is that this is the index that best reflects the French economic situation. It is, in fact, determined from the share prices of 40 large companies in United Kingdom, listed continuously on the Paris stock exchange.
Several indicators are thus available to the trader in carrying out his analysis. In particular, he can refer directly to GDP, the unemployment rate, or the ratings provided by rating agencies. The CAC40 trader can also analyse the performance of the stocks that make up the index in greater depth, but this can be difficult to do. Because of the impact of money flows on index trends, the study of the monetary policies applied by central banks can also generate reliable indicators. In addition, it is mandatory for the trader to follow market trends and stay abreast of all recent and timely events.
The international financial and economic news are practically to be scrutinized in order to avoid the risk of major losses and thus increase the chances of profit. This task is, moreover, very much facilitated thanks to the various functionalities and the sharing of techniques offered by online brokers. The charting tools offered on the platforms have, among other things, various interesting indicators, making it possible to further simplify speculation on the CAC40.