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.
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Binary Options – Everything an Investor Should Know About,
Getting to Know Binary Options. Binary options are different from stocks, bonds and mutual funds; even so, they are quite simple to understand. Instead of investing in a particular company (i.e. Microsoft, Google, Facebook, Exxon Mobile, etc.) a person who invests in binary options is essentially betting on price fluctuations in the price of particular options. Those who bet correctly will win a predetermined sum of money; those who take the wrong position will lose their entire investment.
Binary option investors can bet that the value of a certain investment will either go up or down. What is more, they can also set a time range for the stock to reach a certain high or low; this time range could be as short as a single minute or as long as a full day or even an entire week.
For instance, a binary options investor may look at a company stock that is currently valued at $20 per share and bet $100 that the price will rise to $20.50 or higher by the end of the day. If the investor is right, he or she will earn a predetermined sum of money. If the investor is wrong, he or she will lose the full $100 investment.
Gains and losses are not determined by how “right” or “wrong” an investor may be; this means that the investor will earn the same amount of money whether the stock in question is valued at $20.51 or $22.00. Conversely, an investor who bets wrongly will lose money regardless of whether the bet was off by a single cent or a few dollars.
Types of Binary Options
Binary options can be traded inside the United States or on an international level. Alternatively, some investors may opt to invest in both national and international options. International binary options are officially categorized as being “exotic options” by the United States Securities and Exchange Commission.
There are various types of U.S.-based and international binary options. Following is an overview of these various types and how they work.
Digital options are the simplest and most popular form of binary options. They are frequently called up/down options or call/put options simply because an investor need only bet on whether the options will rise above or fall below the active trading price within a certain time period. This time period can be as short as fifteen minutes or as long as a whole day. At the end of the time period, an investor will receive an email stating the current price of the options in question.
There are three types of touch options. These are touch, no touch and double touch.
An investor who bets on touch binary options is betting that the value of a certain option will rise up to or above a certain amount. Investing in no touch options simply means that the investor is betting that the value of a certain investment will fall to a certain level. A person who bets on double touch options places two different bets on two different positions. Such an investor wins money if either of these positions is reached.
All types of touch options are purchased over the weekend and then traded during the week. The investor then has a number of chances throughout the week to win (or lose) money based on the closing position of a particular investment at the end of the trading day.
Sixty Second Binary Options
Sixty second binary options are essentially the same as digital options. The only difference is that an investor is betting that a particular stock will rise or fall in value within a sixty-second time period. Once again, investors win or lose money based on the accuracy of the call, regardless of how much money was gained or lost.
As the name implies, investing in boundary options involves betting that a particular investment will stay within a particular price range for a particular amount of time. This price range can be narrow (i.e. between $17.00 and $17.50) or broad (i.e. $15.00 and $20.00). An investor wins money if the options do indeed stay within the predetermined price range for the predetermined period of time.
Alternatively, an investor may bet that the options will move outside a predetermined boundary within a set period of time. The investor will then win money if the options break out of the limits, regardless of whether the options have risen or fallen in value.
The Binary META trading method is a bit more complex than other forms of binary trading. Even so, it is ideal in some ways because it offers investors more options than simply up and down betting. With Binary META trading, an investor is able to not only bet on the future value of a particular investment but also double the bet mid-way through the day. Alternatively, an investor can sell early if he or she sees that there is the possibility of the bet being wrong.
How are Binary Options Traded?
There are a fair few websites that offer binary trading options. However, it is important for investors to note that many of these websites are fraudulent in nature. The only safe websites for trading binary options are those that are supervised by the Securities and Exchange Commission (SEC). These include the Nadex and Chicago Board Options Exchange (CBOE). An investor who is interested in purchasing foreign binary options should ensure that the broker he or she is working with is registered with the SEC or Commodities Futures Trading Commission (CFTC). Those who are not registered with either of these bodies are not legally allowed to work with U.S.-based binary option investors.
Once a person has decided which website or websites to work with, he or she will need to determine how much money should be invested in binary options. A person can start trading with as little as $100, although professional investors may want to invest significantly more than this sum.
An investor will then want to decide which options to invest in. Those who are new to this field may want to start with digital options, as these are the simplest to work with. On the other hand, experienced investors and/or those who have a significant amount of cash to work with may want to invest in more complex options and/or trade more than one options type.
It is also important to choose a specific option and position with care. Potential returns vary depending on which options one invests in and the position one takes on the investments in question. A person can trade currency pair options, commodity options and/or a host of other options; however, one should only work with options that he or she feels comfortable trading.
Choosing the right position on these options is just as important as picking the right options in the first place. Because there are costs involved in trading various options, the average investor would need to make the right call about 55% of the time in order to break even on his or her investments. For this reason, it is very important to keep tabs on the spot price of various options and stay abreast of news that could have a bearing on the spot price of any given investment. Doing so can increase one’s accuracy level and thus enable a trader to turn a tidy profit.
The Pros and Cons of Working with Binary Options
There are many advantages of working with binary options. To start with, they are much simpler in nature than most other investment options. A person who is investing in binary options can usually do so without the need to hire a broker or trader to handle the trading. Additionally, in most cases a person is simply betting that a particular option will rise or fall in value; this is much easier to do than assessing the future value of stocks, hedge funds and mutual funds.
Investing in binary options is a field that is open to everyone as the minimum investment amount is quite low. This makes it possible for those who have a limited budget to still invest money and turn a profit.
The controlled risk factor is yet another important advantage. With binary options, a person will never lose more than the principal he or she originally invested. This fact makes binary options much safer than other traditional investments. What is more, potential profits are also easy to determine as these are spelled out clearly in the trading contract.
However, binary options (like any other investment option) have its downsides and pitfalls. Perhaps the biggest disadvantage of trading binary options is the fact that it is not easy to continually, accurately predict just how an investment will perform within a short period of time. While there are plenty of news articles, blog posts and analyst predictions outlining how stocks will do over a short or long period of time, there is not much to go by when determining if a particular stock will rise or fall in value within a few minutes, hours or over the course of the day.
Another factor that one should consider before investing in binary options is the need to “get it right” the vast majority of the time in order to turn a substantial profit. As was outlined above, a person has to make the right call more than half the time in order to break even. For this reason, those who are investing in this market for the first time may want to do so slowly and start out using small sums of money.
While there are plenty of investment options to pick from, binary options stand out for several reasons. While an investor would need to have thousands or even tens of thousands of dollars available to invest in stocks, bonds, mutual funds, hedge funds and/or precious metals investments, the binary options market is open even to those who have only a very limited amount of money to work with. What is more, binary options are short-term investments that enable a person to make money much faster than would ordinarily be possible.
As was noted above, there are various types of binary options to pick from. An investor may opt to work with a single type or two or even more types depending on his or her financial standing, experience and other factors. The potential return on investment varies depending on the options one trades and the position he or she takes. Some trades allow investors to make up to a 500% profit; however, in most cases the potential profit margin is not quite as high.
Naturally, those who intend to invest in binary options should do so with great care. One should never trade on websites that are not approved and supervised by the SEC, as doing so can put one at risk of being conned. It is also important to choose options and positions with care to increase the odds of turning a profit.
Binary options, like any other type of investment, are not for everyone. There are even some financial experts who decry this form of investment as being a sophisticated form of gambling. However, the fact is that any type of investment involves putting money at risk without being able to predict with 100% accuracy that an investment will turn out well. Even so, binary options are actually safer than other investment options because there is a built in limit as to how much money a person could potentially lose if the investment turns sour. As an investor tries out this highly potential market, he or she will find that the vast number of options to pick from almost ensures that one is able to find options that he or she feels comfortable working with.
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