Binary Options 101 - The Basics

Binary Options 101 - The Basics

Submitted by adil on Thu, 01/16/2014 - 22:48

Binary Options trading provides you with an opportunity to trade all the important commodities, currency pairs and indices. The best thing about binary options is that you can trade Google stocks, Japanese Yen, trader gold features and virtually everything using the same platform. Similarly, you need not to change broker in order to trade internationally. In fact, international traders trade binary options without any hassle as most of the top brokers offer innumerable stocks and indices from Asia and Europe.

The Length of Trades:

Trades in binary options last for only a very short time period and you should be especially careful of them. Some of the trades last for bit longer but most of them are pretty short. It is up to you to decide which time period suits your particular requirements. Binary options offers trades lasting only for 5 seconds or 60 seconds and they are best for you if you do not want to engage your money for a long time. On the other hand you can trade for hours if you have the capacity to wait.

You need to understand that you can choose the trading periods before placing the trade. Once you commit to a particular trade, you can only wait and hope for the best. In this regard, other trading options allows you to sell your shares at any time during trade but binary options do not and you have to live with this fact.

Basic Types of Binary Options Trading:

There are mainly three types of options trading that you need to understand. They are described as under.

• The Call/Put Trade:

This is the simplest type of option trading in which you just try to predict whether the asset’s price will have gone up or down when the trade expires.

• One Touch Trade:

One touch trade is a bit complex in which you get a target price in the start of trade. You are considered to have traded profitably if the value of asset increases to that price or even higher during at any point before the trade expires. You get a chance to best prepare yourself beforehand as the broker always specifies the price. 

• Boundary Trade:

As compared to one touch trade, you will get a range of prices from the broker in the beginning of trade. It is then up to you to predict whether the asset’s price will remain within this range or not.

How to Select a Particular Binary Option Trade:

It usually depends upon the person to decide which type of trade will work best for him. Many different factors influence your decision most important of which is your experience level. If you are a veteran Forex trader, you can easily adapt to binary options in order to increase your profits using a different strategy. Similarly, binary options is pretty helpful for you if you are a day trader wanting to eliminate your risks. In this case, you should try to trade with stocks you are already familiar with.

You should also consider your goals and decide which option trading method can help you to attain them. Similarly, you should prefer quality over quantity as it is better to have 5 successful trades a day rather than 4 successful and 3 unsuccessful ones.

Options trading offers many different versions of trade and profits offered by some of them are outrageous. Depending upon the broker, you can earn profit as much as 300%. You just need to register with a right broker, deposit some money, learn trading tricks in real time as long as you can using a demo account and start trading to give a new twist to your career.