Introduction to Binary Options

April 20, 2013 8:09 am

Basically, binary option trading involves asset-price prediction. While most trading operations on the Forex market require good precision, trading with binary options allows the user to be less precise without increasing the risk. However, this doesn’t mean that binary options are an easy way to earn money, because just like any other aspect of the Forex market, they are difficult to learn and you may spend years until you master them.

When a user is trading with binary options, he only has to predict whether the price of a certain asset will go up or down during a specific period of time. When the time comes, the user will either earn or lose money, depending on the price change. There is also a chance that the user will be refunded in case the price hasn’t changed.

Many users prefer trading with binary options, because this is the only method which is fully transparent. Traders can easily learn how much money they can lose or win from a trade. The total profit depends on the percentage which the broker offers. The total loss is exactly the amount which the trader invested initially. Thanks to the stable loss amount, binary options traders can enjoy better control over their funds.

This is one of the simplest forms of trading and it is often preferred by people who are new to the Forex market. It isn’t so difficult to learn, but the trader must familiarize himself with the different asset performance analysis methods. There are also many trading strategies that can be used to get better knowledge of binary options trading and enhance your skills.

When talking about binary options trading, there are just two predictions which the user can make – Call and Put. Call is used when the trader thinks that asset’s price will rise, while Put is used when the trader feels that the price will go down.

Unlike most aspects of the Forex market binary options trading isn’t open-ended. This means that the trader will have to link their predictions with a specific time period or expiry time. When the specific time comes, the asset’s value will determine whether the trader earns or loses money. Expiry time periods are very flexible and the trader can choose any time period from just a few minutes to several weeks.

Most brokers provide traders with a wide array of assets that can be used for binary options trading. Those assets are separated into four main classes – stocks, currencies, indices and commodities. Each one of these classes includes a number of assets.

If you think that binary options trading is an interesting way to profit from the Forex market, then you shouldn’t rush your investment. Find a broker that offers you a demo account and test your strategies and analysis with fake money in order to determine whether your methods are successful.

Where to Trade

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