Binary Options are a relatively new way of trading Stocks, currencies and commodities. Basically binary options are a simple way to trade the price of fluctuations in the global markets. You are looking to trade either a call (up) or a Put (down) trade and if you win the trade over a given period of time, you win. If you trade correctly by only one pip, it does not matter, what matters is that you have predicted movement in the correct direction, be it 1 pip or 1000 pips, you still win.
How to trade Binary Options
The biggest attraction of trading binary options is that before you even start you are aware of the risks involved and the potential profit you will make. As when you decide to take out a trade you will be given the win percentage on your stake and if you lose you will lose your stake.
Example – So if we decide to place a Call trade on Apple. we may want to stake $25 to expire in 30 Minutes, the win % is 80% and the current stock price of Apple is 108.61. If in 30 minute times the price of Apple is 108.87, we WIN. So we had $25 @ 80% = $20 so total return will be $45. If Apple finishes below 108.61 we lose our stake. If Apple finishes On 108.61 we TIE and get our stake back.
Binary Options are available on a wide range of assets including Currencies, Indices and Commodities. There is also a wide range of time scales on which you can trade, anything from 60 seconds up to as long as a week or even longer in certain circumstances.
The amount that you can win on binary options depends on two factors firstly the amount that you stake and secondly the payout percentage, this id generally between 70% and 95%. These are the only factors as it does not matter how many pips you are correct by as long as you are correct.
Types of Binary Option Trades
- High / Low – This is the most common method of trading Binary Options, as we have described above you are predicting whether an asset will go up or down
- Above/ Below – this is a similar process to the High /Low except that a value will be given and you will have to predict whether it will finish above or below this figure.
- Touch /No Touch – In this scenario a set price is given and you will predict whether you think the price of the asset will touch the given price or will not touch.
- 60 second or Turbo Trades – These are very fast pace trades the same principle as High/Low trades just quicker.
- Boundary – This is basically the fact you are predicting the asset will stay within a certain price range within a given time.
Start trading Binary Options
The Best way for anyone to start trading binary options is to first start with a demo account. All regulated brokers will set one up for you although you may have to ask for it. You will need to open an account with a regulated broker, see our page on Regulated brokers. You need to use a regulated broker because there are many brokers around that are not regulated and are basically not to be trusted.
Once you have set up an account and you have a demo account it is worth getting to learn some good strategies. As with any business, you need to learn the skills first before delving in blindfolded. See our strategies page and search the web for more there are many available. try them on the demo account and when you are confident then you are ready to use real money.
Now you need to learn good money management. As a rule, of thumb, it is best not to trade more than 10% of your Investment budget. Ideally, start with just 5% and as you get more confident you can start to trade more. Trading too much too early can lead to losing your money before you really get started.
Avoid being Scammed
In the binary options business, there are a lot of sharks out there to scam you for all your hard earned cash. So it is most important to only trade with Regulated brokers and only take advice from trusted sources. There are many autoloaders on the market most of which are useless just a scam. If you do want to go down the road of auto traders only use recommended ones. We have many reviews on this site and Far too many scams to mention but please before signing up to any check out our reviews first.
Important risk note
Trading binary options can generate can generate significant benefits but does also involve a risk element, including partial or full loss of funds.We, therefore, would advise anyone looking to trade to read the brokers declaimer page and full terms and conditions. Also, any individual capital gain could be taxable and you should check in your country of residence.