How to Trade with Binary Options
The Binary Options business is growing fast and integrates itself in the financial market as one of the leaders in the trading industry. We will teach you how to trade with binary options in this tutorial. The idea that anyone can profit from the movement of value in currencies, stocks, commodities. and indices sounds appealing to many.
Binary options are limited to two possible decisions. Based on a “yes” and “no” system which is called Put and Call in the market, traders simply place their trade on one or the other possibility. Call (up) is the option you choose when you believe that the price of the chosen product will rise, and Put (down) is quite for the contrary – when you expect the price to fall.
The main idea of the market is that you do not buy the given products, but simply place a bet on the price movements. Binary options are simple to comprehend, like the high-low option, for example, which is the best-known type among binary options. This method is often called the fixed-return option.
Down and Dirty: Basic Binary Option Tips
Since no particular experience is required for this kind of trading, many people rush into the business trying to secure profit and earn some cash overnight. To be remembered when learning how to trade with binary options.
This guide displays some basic instructions for newcomers in order to familiarize them with the highly interesting and exciting money game. The easy steps below teach you how to trade with binary options in a simple format.
One of the secrets is always to use multiple brokers. Find a decent broker, i.e. brokers to register with and make your deposit to start trading. In general, the minimum deposit is set at $100.
Always look up the history and background of the brokers of your choice and their regulation policies, in order to find high-quality and serious brokers who do not engage in manipulation, scamming, and malpractice.
Make a decision on what you want to trade. Is it currencies, shares, stocks? Remember, you do not buy these products, you simply predict whether the prices will go up or down.
Especially as a beginner, you should not start with large investments. Keep it simple until you figure out how the prices work.
There are short and long-term trades with an expiry date. They include 60-seconds, hourly, daily, weekly, monthly and annual trades.
Let’s say you select to participate in a 60 seconds trade. This means that the trade is open only for one minute, and you need to make a quick decision. Let’s assume that you have invested $100 with a 90% payout and that you made the right call on this short trade. This means that you earned additional 90 dollars.
The Right Broker
From the many brokers out there, make sure that you choose one that is certified by a national or publicly recognized authority. Work only with certified brokers. Moreover, work with brokers who clearly specify who their regulator is.
Variety of Trading Options
We’ve already mentioned the Call and Put type of trading, which can be referred to as High Low as well. As stated, it consists of making a prediction on whether the price is going up or down in a specified time.
The No Touch Option
This option gives traders the possibility to pick a price that the selected product is not to reach or exceed, again, in a given period.
Traders can pick a price range that the chosen product will stay in until the expiration date. The price of the product is not to exit the given price frame selected by the trader. If it does, the investment is lost.
There is also the option to Close Trade, offered by some brokers. This means that traders can back out from a trade before the expiry date and prevent the loss of their entire investment. The number of brokers who make this option readily available is really small, at least at this point in time.
Advantages and Disadvantages of Binary Options Trading
The good thing is that the risk and reward policy is clear. It is a defined market where you either win a fixed amount or lose it. The trader does not depend on the movements of the market but solely on the decision he or she makes. The liquidity issue, which is always a crucial factor in the stocks and Forex market, does not play a role here since the trader never buys an asset.
Usually, brokers do not charge any commissions or fees which is also a plus for investors.
The trade represents simply a guessing game where the trader has only to predict if the underlying asset is going up or down.
One has to bear in mind that the risk is unfortunately always higher than the chances to win. To cover up for investments, a trader has to have a high frequency rate of correct predictions. The general truth of the capital market applies to binary options trading as well; losing trade costs are always higher than the trade profits.
Another flaw is the market itself. The capital market is highly decentralized in general, and scammers and fraudster always look for loopholes to make money at other people’s expense.
Nevertheless, traders with decent brokers have a real chance to earn some money and their funds, and profits are relatively safe. Just always make sure to pick a reliable trader and base your predictions on as much available information as possible. Now that you have read our how to trade with binary options guide please feel free to read our more advanced and technical guides for trading online.