How to trade binary options
Not a lot of investors are aware of the Binary options investments, which is becoming very popular with many investors today. If you are an investor not wanting to be stuck in a long term holding investment such as stocks, bonds, mutual funds, traditional options and futures, then Binary Options is something you should try. Binary options offer a quick profit if you invest wisely.
Before you get started with Binary options online, you should make yourself farmiliar with what a Binary option is and how it works. Binary options are simply predictions on how your asset will perform on a given day or specific expiry time. The main question being, will your asset price rise or fall within the time period given.
A basic guide to Binary Options:
Investors these days are becoming more involved in binary options due to its high returns and simplicity. Also due to the fact that the returns on a binary options trades (ranging from 70%-85%) are fixed before the option is purchased. These return percentages are what make Binary options so attractive to investors. So now all you need to know is that Binary options offer a fixed payout based on your assets performance.
The Basic understanding of a Binary options:
A binary option, which is also known as an all or nothing is a basic trading instrument with fixed returns that are determined at the start of the trade. If your binary option expires “in the money”, then you have earned a profit, but if the option expires “out of the money” then you will lose your initial investment.
Binary Options do not have a set price like those of traditional options through the market, you as a trader decide the amount of money you wish to risk on your Binary option choice and the amount of money you wish to risk is the exact amount you invest. All Binary options have different expiry times, these can be one day, one month, one hour, or even five minutes. Most people new to Binary options prefer the shorter time duration contracts, as they are more suitable for short term profits.
Below is an example of a Binary Option trade:
Listening to morning market shows can help you choose an asset to trade on Binary options. For example, one reporter tells you the cost of oil per barrel will rise by $10 on that day, giving you a profit on your trade. Firstly you should look up with your broker site the payout percentage for the call option. Say your broker is 170% and you decide to invest $500 and your asset closes “in the money” your $500 investment would now become $850 giving you a $350 profit. You also must remember that if the report was wrong and your investment expires “out of the money”, then you will lose at least 90% of your investment (depending on your chosen Binary option broker).
Binary options and Binary options brokers help:
Binary options are traded by both amateurs and professional traders due to their high return and short term investment trades. In order to make high return payouts you should take note of numerous advanced strategies for binary options available throughout our site. Even though Binary options can be learnt in a few minutes, you should also obtain a Binary options trading guide from your Binary options broker to help you get to that high return investment.
Binary options brokers provide a trading platform for you to trade binary options. You can find Binary options brokers online. Remember that all Binary options brokers have different trading platforms from one another. When you choose a binary options broker, follow all their instructions, and if you can find a broker who offers a demo trade thay you can try it out to get a feel of the Binary options world before signing up.
All broker sites offer different variations to the basics of Binary options, it is always best to read up on the house rules so you can leverage the opportunities of all your investment trades. Most of the leading Binary option brokers offer trading tutorials for all of their clients new or old. Online Binary options brokers offer you a variety of contracts and assets from all different markets, they also offer 24 hour helpline communications. The online Binary options brokers have made it easy for an investor to sit comfortably at home, in the office or anywhere with wifi connection, and trade binary options throughout the day. Even easier, they have made it possible to access binary options 24 hours a day, 6 days a week.
Binary option benefits:
Binary options offer some unique benefits that traditional options trading in the market or other investment vehicles don’t. The first benefit is that it is so simple to use and understand. Secondly, within a short time (5 minutes to one hour) your potential to gain upwards of 70% – 85% profit depending on your broker’s payout percentage can be quite profitable. Lastly, your risk to rewards are easy to calculate and your return (profit) or loss is already known before your execution of any trade. The biggest benefit to Binary options, is that there are no commissions associated with this type of trading.
The Volatility of the Market:
The Binary options market is not as vulnerable as regular market volatility. Binary options are not effected by the price fluctuations as in regular stock markets, as the only price you worry about is the actual price upon expiration of the contract. This makes Binary options online trading more attractive to traders than those of traditional markets.
Finding a Broker for Binary Options:
Before you choose a binary options broker, you should test drive the broker’s trading platform to determine its stability. Also with doing this, you can determine their real time response, what they are offering in technical analysis and charting capabilities.
Binary options and how they work:
Binary options are considered one of the best ways of making a profit on your money without putting an investment portfolio at risk. Even if you have little or no knowledge of the financial markets, you will be able to easily invest on commodities, stocks and currencies with no difficulties. All you really need to know is that binary options are also known as all or nothing, meaning win all or lose all.
As a Binary options trader, you have to predict whether your asset will rise in price or drop in price. In short terms if you believe the price on your asset will go up you will invest in a call option, and if you believe the price will go down on your investment then you will invest in a put option. If done correctly and you have for example invested in a call option and the price does go up, then you will get paid the maximum payout. The end result of this type of investment is also known as “in the money”. Just remember that if your prediction is incorrect and the price of your investment goes down (or known as out of money) then that will mean you are losing the premium that you invested into that option.
Here is an easy example of in the money, out of the money or at the money:
In the Money: For binary options that expire in the money, you will typically get offered a return of 70%-85% (depending on your broker’s percentage). Say you invested $100 and your trade expired in the money, your return would be $170-$185.
Out of Money: For binary options that expire “out of the money”, you will typically be offered a refund of 0%-15% of your investment. Say for example your investment of $100 lands in the “out of money” category then you will receive a refund of $0-$15 (this also depends if you have a broker who offers refunds on out of money investments)
At the Money: If your investment expires at the money, then you will be refunded in full.
Some binary option brokers offer some cash back to all contracts which happen to have traded in the “out of the money” catagory at the expiration time, this is considered an incentive for you to stay with that broker. With all the benefits from Binary options, this is now making Binary options well known in the trading industry and since the amount of payout does not go by any price fluctuation in the market, but by the price set at the expiration, this is making binary options simple and quick on a return if invested properly.
The best attraction to Binary options is the low risk factor, as the amount of money you invest is the amount of money you chance losing. While the risk is low for binary options, the profits can be determined on the actual start of your investment upon the amount you have chosen to invest, making you aware before entering the trade whether your investment is good for you or not.
Types of trading platforms:
Below you will find an easy explanation to some of the articles above:
This is known at the start of your investment when you decide whether upon expiry your investment will be at a higher price or lower price than the purchase price. If you choose higher (call option) at the start of your investment and it closes at a higher price, then you will profit from that investment. If you choose higher at the start of your investment and it closed lower at the expiry time, then you will not profit from your investment.
- One Touch
This type of options trade allows you to decide whether your asset will have touched or failed to touch its target price upon expiry. If you decided to select touch in order to profit, then your asset must reach the target price, but only once at any point in the trading time before expiry. If you decided to select No Touch, in order to profit, then your asset must expire without ever touching its target point throughout the expiry timeline.
This type of options trade allows you to decide whether your asset’s price will settle inside or outside a certain price range upon expiry. In order to profit on an inside trade, your asset price must settle inside or within the upper or lower limits of its range. On the other hand if you selected inside and your chosen asset is outside the upper or lower limit, then you will not profit at all from your investment.
Binary Options quick reminder
Just remember that in a Binary option there is no commission charges, or spreads to worry about. You will be given a percentage rate from your broker ranging from 70%-85% on your return if your investment is correct. Basically all you need to do is pick your asset to invest in, the direction you think the price may go (up or down) then select the amount you wish to invest. At the expiry time on your investment you will then know if your judgement on your chosen asset was correct.
With Binary options, you never take ownership of the asset you are investing in, you are just making a prediction on where the price of the chosen asset will move. Binary options might seem like a gamble, but if you research your investment before hand, it can be quite profitable.
Well there you have it, the basic idea into binary options. You do not need the knowledge of the stock market that most investors believe they do. It is quick and easy to learn and can offer you quick profits without sitting all day or months hoping for a return on your money invested. Take the time to look through our site to help you along the way in choosing an appropriate broker, and to help you understand the world of Binary options online with our full detailed pages.