Trading Binary Options

June 22, 2013 12:07 pm

trading_binary_optionsOne of the most popular instruments that traders use is binary options and in this article, you’ll learn more about binary options trading, and find out their most important pros and cons.

Binary options have been around for many years, so it isn’t a surprise that at the moment this is one of the most popular financial instruments. Not only this, but it is also considered to be one of the most convenient instruments for novice traders who are about to make their first steps in the stock market. If you want to trade with binary options, then you should know that you can pick from four types of assets – indices, currencies, stocks and commodities. Of course, each asset has many categories, but we’ll talk about them in another article. There are two types of binary options – ‘put option’ and ‘call option’.

Put Option

If you opt for a ‘Put Option’ then you will wage that the price of the chosen asset will go beneath a certain point in a specific period of time, usually referred to as ‘expiration time’.

Call option

‘Call Option’ is the exact opposite of the previous option. When you select ‘Call Option’, then you predict that the chosen asset’s price will rise in a specific period of time. If you are about to start trading with binary options, then there are some things that you must decide in order to increase your chances of success.

1. Picking The Right Asset
Online binary options brokers will provide you with a wide range of assets that can be used to satisfy your trading needs. Usually, traders prefer certain types of assets. For example, many traders focus on assets that have a strong media presence, because these assets are considered to be more predictable. In short, the best idea is to opt for a more popular asset that is regularly included in the financial news. Also, make sure that there is enough statistical information about the asset you’ve chosen. More figures, statistics and graphs will allow you to gain a better perspective of the asset’s price movement.

2. Expiration Time
Most binary options come with two sets of expiration times. One of them is an hourly expiration, while the other one is daily expiration time. If you pick daily expiration, then your deal will be closed when the trading day ends.

3. Initial Investment
Many binary options websites state that they offer 81% profit for successful deals. If you compare the amount to other financial instruments like Forex, then you’ll see that the offer is pretty good. However, binary options are a bit riskier than traditional financial instruments, so you may want to think twice before starting with them.

Meaningless what choice you’ll make, one thing is for sure – you need to take necessary amount of time to get familiar with binary options and read more about the specifics of this financial instrument. Start slowly, get familiar with the application your broker works with, and learn about all of its helpful features. It is strongly recommended to start trading with small amounts of money, at least until you get familiar with binary options and the way they work.

Trading binary options isn’t so difficult, as long as you know where to search for information. Find sources that provide you with the most recent and official news, and you can be sure that sooner or later you’ll be able to quickly and easily predict the price movement of the asset you’ve chosen.

Where to Trade

BinaryTribune is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action, Binary Options and Social Trading.

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