Binary options are, without doubt, the easiest way to speculate on the stock market. Moreover, this type of investment is no longer dedicated to professionals, being now accessible to almost everyone. Transactions can be made on different assets, including the CAC40. A stock market index whose speculation offers certain advantages. Discover…
How the binary options work
The binary option, as its name suggests, is based on 2 choices: up and down. Trading in this type of option is particularly simple, which explains why individuals are so keen on this practice. It is simply a matter of betting on the rise or fall in the price of an asset before a predefined deadline. Generally, the trader has a choice from a wide range of products, including, among others, currency pairs, commodities, corporate stocks, government bonds, as well as stock market indices. The number of assets available depends, however, on the brokerage company, as do the conditions applied in trading.
As far as the expiry date is concerned, the expiry period of the option can range from a few seconds to several months, depending on the broker. In any case, because of this simple basic principle, binary options are very successful on the stock market speculation market. Most novice traders opt for this type of option and many make significant gains. Indeed, if the trader is just betting on the decrease or increase in assets, he can make profits up to 500% of his initial bet. Binary option trading is also very easy to access, due to the large number of online brokers and the various functionalities they offer.
Betting can be done on mobile devices and there are, among other things, functions that allow you to receive alerts according to market developments. However, like any stock market investment, trading binary options involves controlling a few points to avoid losses and increase your chances of winning. In particular, the choice of assets is an essential starting point and, according to professionals in the field, the CAC40 index can be perfectly adapted to a trading start.
Favourable trends to speculate on the CAC40
While novice traders sometimes limit themselves to trading in currency pairs, it should be noted that many other assets are available on the market and may be more advantageous than Forex. In particular, market conditions are very favourable for speculating on indices, including the CAC40 in particular. Every month, the FED (Federal Reserve) or central bank of the United States, the bank of the United Kingdom, as well as the Japanese central bank, pour billions of dollars into the market, which automatically leads to an increase in stock market indices. In 2013, the CAC40 rose by 30% and to date, asset prices seem to be rising almost constantly.
The injection of liquidity from emerging markets is one of the reasons for this upward trend, which in any case could be a perfect investment opportunity for traders. The latter can, in fact, take advantage of these market conditions to open “Call” positions in binary options. Of course, there are always risks of sudden changes and rather sceptical investors can place put positions. The most important thing, in fact, is to base yourself on economic news in order to anticipate market developments more easily. The CAC40 is qualified as a benchmark index, best reflecting the French economic situation. Thus, speculation must be carried out mainly according to economic news and market movements.
How to trade on the CAC40?
The CAC40 is, in fact, the main index of the Paris Stock Exchange. Created in 1987 with 1,000 basis points, it is now one of the benchmark stock market indices on the international market. This index is based on the prices of 40 shares of companies listed on Euronext Paris, which operate in different sectors of activity. In this sense, the CAC40 reflects the economic trend of the major French companies and, automatically, that of the country. Speculation on this stock market index is therefore rather easy, based on economic news in France, but also on the monetary policies of central banks.
GDP is probably the best indicator to consider, but the trader can also refer to unemployment rates or other economic indicators. The analysis of the stocks that make up the CAC40 can also be very useful in anticipating market trends. However, conducting such a study can be complex and slow. Also, the best way to make good speculation is to refer at the same time to the history of economic developments and graphical indicators. The information collected, mixed with market news, makes it easier to determine the future trend of the index.
In any case, trading binary options on the CAC40 is nowadays very easy for online brokers such as:
- OptionWeb (see our review)
- 24option (see our review)
- TopOption (see our review)
- AnyOption (see our review)
They pride themselves on providing complete elements to carry out transactions, including graphical indicators and various economic alert functionalities. Based on the choice of an increase or decrease, binary options are particularly suitable for this French stock market index. The media coverage of the CAC40, as well as its direct link with the French economy, makes it an easy asset to speculate on in the trading market.