How to Trade Binary Options is one of the most frequent question often being asked by binary options traders.
Binary Options have been around for awhile now but recently (since 2007) and have been a hit among the new traders. They were originally introduced as Digital Options and somehow the name got gradually became more utilized among traders, is binary options basically, mainly due to the fact binary means that there are 2 values and in the case of finance, only 2 possible outcomes, up or down.
This is for anybody who is serious about making money trading the markets. It doesn’t matter if your brand new to the world of trading or your a fully experienced trader, if you have some patience and common sense, it is a possible to Make Money while trading Binary Options.
Trading binary options is all about speculating in which direction an asset is likely to move. No shares need to be bought, no currencies traded. It is a simple and efficient way of investing in the financial markets with a small budget and limited trading skills, whilst also benefiting the more experienced trader too.
So how to trade binary options the right way?
Trading on A binary options platform is a matter of speculating higher or lower i.e. will the price of the underlying asset at a set time in the future be higher or lower than its current price, known as the strike price.
The underlying asset is what the option derives its value from and it could be an index (e.g. Nasdaq), commodity (e.g. Oil), currency pair which is also known as forex (e.g. EUR/USD) or stock e.g. (Apple).
The expiry time of the binary option trade dictates when the contract ends and it can be the end of the nearest hour, or the end of the day, week or month.
The investor then needs to consider the direction in which he believes the asset will move. If he thinks UP, then he will buy a CALL option. If he believes DOWN then he will buy a PUT option.
An option is considered in-the-money if it expires above the strike price in a Call option or below it in a Put. An option is considered out-of-the-money if it expires below the strike price in a Call option or above it in a Put. When you trade binary options you will usually receive payouts of 75-85% for options expiring in-the-money and even a 15% refund for those expiring out-of-the-money.
The major advantage of Binary options trading is its simplicity. You are either in the money or out of the money. If you think the asset will go up, you select the Up arrow in most binary platforms. If you think it will decrease, select the down option and set your price. You can then see what the asset is doing in real time and wait till the position expires. It does not get much simpler than that.
Online binary options trading is as simple as you can get and there is some serious money to be made. If you create an account with the average binary broker, chances are you will find a very simplistic Web based trading environment in which the most blatant two symbols are an up and a down arrow.
You should keep in mind that a key factor of how to trade binary options successfully is predicting whether an asset is on the rise of decline. In theory, you do not need to know very much about finance to partake in online binary options trading.