Binary Options 101
One of the primary benefits of binary options trading is its utter simplicity. No other form of investment is able to deliver such a straightforward process, nor such user-friendly platforms. The basic trade, often referred to as a “Put or Call” trade asks only that the trader decide whether the price of a selected asset is more likely to be higher or lower than the entry price at the time the trading period concludes. With just a bit of practice, anyone can learn to forecast price movement with a reasonable degree of accuracy.
The key elements of each trade include an asset, expiry time, investment amount, and of course your prediction of the upcoming price movement. Within most platforms a trade can be executed with just a few clicks. The reward for each winning trade will be determined by your broker, with the return rate always being presented to you upfront and in advance of each trade. The average return rate ranges from 70% to 85%, with high-yield trades offering significantly more. The prospective loss amount will never exceed the investment amount that you personally have decided upon and committed to the trade.
The aforementioned basic trade is one of the most popular. However, there are actually several trade types to choose from such as 60 Seconds, Boundary, One Touch, Long Term, Pairs, and more. What these offer is a means to profit from different types of asset price movement, such as range-bound, price trends, or volatile. They will also offer a host of different expiry times, allowing traders to pair their selection with the appropriate time frame. Depending on the platform you choose, there should be expiry times ranging from as short as 30 seconds to as long as a full year.
Assets are an important part of the equation. Unlike in traditional investing, those who trade binary options never actually purchase any shares. In fact, the relationship between the trader and a chosen asset last only as long as the trade itself does. Once the expiry time period has completed, the contract closes and any connection to the asset is severed. Most brokers offer at least 50 assets to choose from, with some offers as many as 200 in total. Traders can expect to find stocks, currency pairs, indices, and commodities with the platform they have chosen. A very small number of brokers also offer trading with bonds.
Some brokers like Option Fair, offer optional trade features such as Sell, Double Up, and Rollover. Sell will allow you to sell an open position back to your broker. Double Up is a trade replication tool for use with in the money positions. Rollover is a tool that can be used to extend an expiry period. Each of these features are completely optional, but when used correctly each can be used to increase your daily earnings. Not all brokers offer these, so if they are of interest to you be sure to seek out a broker that does.
The broker selection process is quite important, as each broker is going to deliver their own platform and trade components. Elements such as banking, customer service, start-up cost, and withdrawal fees must be taken into consideration when making a selection. The average minimum deposit at this time ranges from $100-$250. Since 99.9% of brokers do not collect any per-trade or transactions fees, depositors can expect all of their deposited funds to be available for use in trades.
The bottom line is that those who wish to earn money from trading binary options can do so if they are willing to put forth a bit of effort. Substantial profits only come to those who take the time to learn how to analyze market conditions and then use this information to determine how the price of an asset is likely to behave during a specified time period. The act of trading is extremely simple and can be mastered in an hour or less. An excellent broker, basic analysis skills, and a solid investment plan are the keys to success.