Binary options basics
Everyone can Trade, but Trading is Not for Everyone!
Binary option trading enables both beginner and experienced investors to make substantial returns from successfully trading the financial markets. This form of investing grows in popularity by the day, as people from all around the world enjoy the benefits binary option trading has to offer.
Trading Binary Options, it sounds like a complicated product, however it is one of the simplest financial products at the moment. Especially for beginning traders it is a good product to get acquainted with trading financial instruments.
The basic idea behind Binary Options trading is quiet simple, a prediction is made on whether the price of an underlying asset (e.g., stock, commodity, index, currency) will finish above or below a “Strike Price” (The price that an underlying assets holds at the time one commences trading), when the trade expires.
As the name Binary suggests there are only two possible outcomes, a prediction is correct or incorrect.
When trading you choose to place either a “Call Option” or “Put Option” – A Call option predicts that an underlying asset will expire above the strike price, and a Put option predicts that it will expire below.
With Binary options, the return rate on an investment is fixed. Should a trade expire one dollar or two hundred dollars above or below the Strike Price (depending on the direction selected) the payoff will be the same, it is not proportional to the price at which the option expires.
Types of options Traded
An option can be based on any type of asset that is traded in the market, including indices (such as Dow Jones), currency pairs (ex: Euro vs. Dollar), futures (such as the FTSE100 futures) and commodities (such as silver and oil).
Understanding the risk
Binary options are a simple way to trade price fluctuations in multiple global markets such as indices, futures, stocks, commodities and currencies. But a trader needs to understand the risks and rewards of these often-misunderstood instruments. Binary Options are different from traditional options. The major difference is that Binary Options are much easier to understand.
New to Binary Options?
Binary Options give traders who do not consider themselves experts on the most complex financial instruments, or who do not have the means to invest thousands of dollars in their first trade, a feasible option. With Binary Options, you can benefit significant profits when trading successfully, while not having to invest large sums of money.
Some of the benefits of Binary Option trading include instant results, simple trading, Web-based trading and potential of high rewards.
The simple way of trading is what most beginners like the best about Binary Options, it’s a great way to get to know the financial markets, without having to spend time to learn difficult to understand financial instruments. This way you can focus primarily on your trading.
Do your research
The down sides of Binary options trading, like other markets, are that without sufficient preparation in the form of research, you can lose money.
This is why we always advise our investors to open a demo account first and read our first time trader guide.
Before creating your account
First of all, there’s no real need to start binary trading if you are not interested in learning about the financial market. After all, your success in the long rung will be based on your knowledge, not your luck. In order to predict the direction of a market price correctly, you need to know what events are taking place at the moment that may affect the market trend. This means that you will have to read financial news, especially regarding the types of commodities you are looking to trade with.