indicesWhen it comes to investing, there are several different instruments that investors use to find stocks, make trades, etc. One of those instruments is stock market indices, or in singular terms, a stock market index. A stock market index is a list of stocks that are listed in order of strength. Some indexes may view volume as strength, while others view market capitalization as strength. Therefore, you’ll notice that some indexes are float (volume) weighted while others are market capitalization weighted. The only difference between the to is how the publisher of the index views strength.

Most Traded Indices In Binary Options

In the world of binary options, there are some indices that are traded far more than others. Those indices include…

  • NASDAQ – The NASDAQ is an index published in the United States that tracks the top performing technology companies.
  • Dow Jones Industrial Average – The Dow Jones Industrial Average is arguably the most popular stock market index in the world. It lists the top companies in the top market sectors within the United States.
  • DAX – The DAX is the leading market indicator for the German stock market.

What Causes Movement In Indices

When it comes to any stock market index, there are a few factors that will generally cause quite a bit of movement. Those factors include…

  • Constituent Performance – Stock market indices are only as good as the constituents listed. With that said, when the constituents on any given index are performing positively overall, the index generally performs positively. Adversely, when the constituents on a specific index are performing negatively overall, the index tends to do the same.
  • Economic Conditions – Because investment decisions can change dramatically along with any change in economic conditions, they tend to play a key role in the performance of stock market indices. When economic conditions are positive, the markets tend to do well. Adversely, when economic conditions are negative. The markets tend to do poorly.
  • Geopolitical Conditions – When geopolitical conditions around the world are poor, markets tend to be on the downtrend. However, indices tend to do best under positive geopolitical conditions.

How To Trade Binary Options Based On A Stock Market Index

Step #1: Choose An Index – First, you’ll need to choose a stock market index to trade binary options based on.

Step #2: Do Your Research – Do research to decide if the index is more likely to rise or fall in the near future.

Step #3: Purchase Your Option – If you feel as though the index will rise in value, purchase a call option. If you feel as though the index will fall in value, purchase a put option.

If your predictions are correct, you’ll earn returns up to 80%!

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