An underlying asset is a financial instrument which a trader invests in, when trading binary options.


A binary options trader has the option of trading any underlying asset a broker offers, including commodities (Gold, Silver, Brent Crude, etc.), currencies (USD, EUR, JPY, etc.), indices (NASDAQ, FTSE 100, CAC 40, etc), and stocks (British Airways, Google, Apple, etc).


Most brokers will offer a large list of underlying assets, though that list may vary from broker to broker.


The most commonly traded underlying asset is any currency pair, most notably the EUR/USD pair. The global volume in traded currencies is around $3 trillion per day, making the foreign exchange market the largest in the world. This volume exceeds that of the international bond market and the international equity market, by 10 and 50, respectively.


The foreign exchange market is especially attractive to traders because of its high level of liquidity, making trading activities more directly executable, compared to the trading of other assets. When buying/selling currencies, the execution time for a trade usually takes less than 1 second due to the high level of liquidity. As a result, the foreign exchange market is active 24 hours a day, for 5 days a week.