Binary Options Trading – Four Simple Steps to Success

Binary options are fixed return options because they come with only 2 possible outcomes. It is a contract which gives the buyer a right to buy an underlying asset at a predecided fixed price within a specified time limit. The security that is being traded is known as the underlying asset and can include commodities (e.g. gold, silver, nickel, lead, and oil), currencies (USD/JPY), stocks (e.g. Apple, Microsoft, IBM) or stock indices. The price at which owner buys or sells is known as the strike price.

When trading binary options the person who is buying the underlying asset chooses call option if he is expecting a rise in the value of the security at the end of the expiry of time which may be the end of the day, week or the month. The buyer will place a call option thinking that the option price would be more than the current price at the time of trade. In vice versa the owner will place a put option if he thinks that the option price will be less than the current price. Binary option trade is the most flexible type of trade available. The trader can select the asset, predicted direction, expiry time and it can all be controlled by the owner of the security. The only thing that remains unknown is whether the asset will expire lesser or higher than the current price.There are significant differences between binary option trading and an ordinary trading. Under ordinary trading you actually own the asset and can possess it for any time you desire. Under option trading, you are actually trading on the variances of the asset. For example, when you do option trade in Microsoft, you are actually not owning the shares of the company but making a contract whether the price of Microsoft’s shares are to go up or down at the end of the expiry period. The correctness to which one can make the prediction after studying the price movement of the security can help in making profit or losses for the trader.

Binary options’ trading is a common tool used by traders nowadays. Most day traders now adopt binary options trading so as to increase the profits that they earn from these trades. Simply, binary options’ trading is a contract which upon the attainment of a specified condition gives a predetermined fixed amount to the trader. The amount to be paid depends on whether his contract ends “in the money” or ends “out of money”. In the case were a contract ends “out of money” the trader will not receive anything at the time of expiry.

Are you interested in doubling your profits without investing more? Trade binary option is the tool that you can apply to secure maximum profits. If you are able to predict the price movements of the security of a company for a particular time period, then surely option trading is the area where you can surely succeed. Binary options trading do carry with it a high risk. But is there any trading instrument which is completely risk free? If you are able to bear the risk that is associated with options trading, the returns that you would be getting will be much more than the returns that any other trading instrument will give you.

How can we make use of the binary options to make money?

1. Trade on the most active and liquid securities: A trader should always do trade on those companies which are very active on the indices and do larger volumes of trade each day. These will be highly capitalized growth oriented companies and you can always expect their prices to go up.

2. Do the opposite if the market has risen already: In a day if you have missed out on a market rally caused by a sector a particular company, then don’t feel sad. You could trade for the opposite as the prices are to settle at the end of the day.3. Give importance for quantity than quality: The most important thing that you should consider while engaging in binary trading options is that you should consider quantity over quality of the securities. Binary options trading will offer you more return when you go for quantity of shares than to its quality. The traders need not worry about the magnitude but consider only direction of the security price.

4. Binary options trading can be used for hedging: The simplest way to make money from binary option trading is to hedge your contract. If you find before the expiry time, that the price movement is in your favour, you can hedge the contract and lock in the already made profits. To conclude, we can definitely say that binary options trading is one of the most powerful trading instrument available with us which can help in maximizing returns to the traders.

How to Do Binary Options Trading?

Binary options trading have emerged as a profitable as well as an entertaining mode of trading in today’s world. The reason why it has become so popular is the fact that with only a small investment, it can make a trader gain substantial profits. Binary option trading is a contract that only has two outcomes, either win or lose. People are extensively choosing this mode of trading as there are not many barriers for entry into it. It can even let you start trading with only $100.

A direct relationship between the trader and the broker is developed with binary option trading. It is a global setup so brokers are available 24 hours a day. You will have to get help from websites that facilitate binary trading. They will have all the necessary tools such as prediction charts, prices and etc. that will assist you during your trading. You have a 50 percent probability of earning money with binary options trading. A good thing is that there is no need to learn any special trading skills.Here is how you are going to trade, when the price of an asset fluctuates, it’s obvious that the price will either increase or decrease. Buy those items that you think the prices are going to raise and you will easily make money out of it.

Follow these tips while binary options trading:

· You must research well before deciding what commodities to trade in. Experts say that you must choose those commodities that are liquid.

· You must know very well how your commodity behaves. Is it going to fall or rise during a specific time period?

· Binary options can let you trade in 180 different assets. It does not simply include commodities; you can also trade indices, currencies, and stocks. There are no restrictions on how much you trade during a day.

· There are no technical mechanics or analysis involved in trading. If you think that the value of an asset will rise, you must select the Call button. On the other hand, if you think that the value of the asset will drop, you must hit the Put button.

· It all depends on how you predict the prices. If you predict in the right direction, then you can make the most out of the opportunity. At the time of expiry, you can receive your investment along with the commission.· Once you are done with choosing the trading platform, you can then click into your account. There you will see all the underlying asset options along with the current price of your asset. You will have to predict whether the price of the asset will increase or decrease in a specific time period.

If you want to win the trade and get the return of your investment, then the price of the asset needs to land near your predicted price. Once you start the trade, you cannot exit until the decline time comes. You can either choose a full day expiry option or even a 60 second expiry option.

How To Confront the Binary Option Trading Dilemma

Binary option trading has the potential to be rewarding. The concept for currency binary option trading is simple: The trader is predicting one of two options when entering a trade; whether that particular currency pairing will be above or below a specific entry point.

If the trader is predicting whether a particular currency pairing is going to be above the specific entry point, at a determined expiry, it is termed a “call” trade.

If the trader is predicting whether a particular currency pairing is going to be below the specific entry point at a determined expiry, it is termed a “put” trade.

The expiry time period of a trade, as mentioned above, is determined by the trader based on the broker availability for the trading platform.Brokers may choose to have available expiry times that range from time periods of 60 seconds, to a couple of hours a day and beyond. The experience and expertise of the trader, along with their preference and comfort level, will help determine which expiry time period is most suitable for their needs.

The binary option currency trader must also decide which currency pairing to trade.

The determination can be solved by analyzing several factors. The trader may determine which currency pairing will best suit the needs necessary to achieve profit.

The available trading sessions and optimal time frames for trading may depend on the trader’s time schedule. The currency trading markets open and close at various time frames that are determined by the region’s financial markets. Binary option trading of currencies is an international financial endeavor that can be easily accessed from laptop, desktop computers and various other mobile devices.

The trader may monitor several currency pairings in one trading session in order to analyze technical trends and indicators of a particular pairing. Once a favorable trend is analyzed and confirmed through the signals and indicators, then the trader will proceed with entering the trade with a “put” or a “call”.

Once the trade is entered, the trader must wait for the currency pairing trade to expire based on the chosen time period. After the trade reaches the expiry time period, it will be determined whether the executed trade was predicted correctly.If the trade was predicted correctly, then the trader is considered to be “in the money” and has reaped the benefit of profit on that particular trade. If the trader has predicted the “put” or “call” trade incorrectly, then the amount of the trade is forfeited (minus any amount the selected broker credits back to the trader).

There are many variables involved in the dilemma of binary option trading that include fundamental and technical analysis. The dilemma of which variables to analyze in entering a binary option trade may be effectively deciphered through study of market movement and conditions, experience, planning and following a successful system.