Binary Options Trading Guide
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This quick guide will explain all the essentials of binary options trading. It includes everything you need to get started, including an explanation of how binary options work as well as details and links to example strategies, tips, resources, and more. While binary options trading is relatively new, it is an investment option that is convenient, easy to implement, and potentially profitable. Getting started is often the hardest part as many of the terms are unfamiliar and the concept can be daunting. This guide will get you up and running.
Binary Options Explained
If something is binary, it has two parts. In binary options trading, two outcomes are possible. The first is that you win a fixed amount of money, and the second is that you lose a fixed amount of money. This is different from other forms of trading, where your position can fluctuate—at a point in time, you can be up by a certain amount, but that can change to a losing position at a different point in time. With binary options, there are no fluctuations or middle ground. You either win or lose.
All trades are based on asset prices and strike prices. The asset price is the current price of the asset. The strike price can be higher or lower than this, and this is the price you think the asset will reach over a set period of time. If the asset reaches the strike price within the time frame, you win; if it doesn’t, you lose.
In other words, binary options trading is all about predicting the way prices are going to move and by how much. This simplicity of choice makes it appealing, as does the volume of trades you can place within a short space of time. In addition, it is a form of trading with a fixed risk (i.e., you cannot lose any more than you bet on the trade).
It is possible to make substantial profits with binary options trading though. This is because the win ratio is usually 70 to 90 percent.
You can read our full guide for step-by-step details on getting started with binary options trading. This will give you the knowledge you need before you start trading, and it will help you set up your account and trading platform for long-term success.
One of the first steps in getting started, however, is choosing a broker and connecting that broker to your trading account. You also have to fund your account before you can begin trading. This is a simple part of the process as most brokers offer a number of deposit methods, including deposits by credit card, by an electronic payment platform, or by wire transfer.
All reputable binary options trading platforms have help and FAQ pages as well as customer support teams. Customer support is usually delivered by email or live chat.
The starting point is therefore to find a broker and read a detailed getting started guide. Even though it might feel daunting now, you will be trading quicker than you think.
How to Trade Binary Options
Binary options are traded online through a trading account. You therefore need Internet access, a compatible device (usually a computer, tablet, or mobile phone), and a trading account.
Setting Up a Binary Options Trading Account
You will have to research the various options available before selecting a binary options trading account. Unfortunately, not all providers offer a good quality of service, so it is important to spend a bit of time at this stage. Here are some things you should look out for:
- Location of the broker
- Average returns generated
- Cost (This is usually a percentage cut that the broker takes on both won or lost trades.)
- How easy the platform is to use
- User reviews
- Third-party expert reviews
- Security policies and features
It is often a good idea to register for a demo account before committing fully. This will give you hands-on knowledge of how the platform really works. If the broker does not offer demo accounts, they may have demo videos you can watch.
Once you have selected a platform, the process of registering and getting set up is easy.
Binary Options Trading and Making Money
It is possible to make money trading in binary options, but it is not without its risks. Also, it is not simple, although there are tools you can get that will help. How much will you really make though?
That depends on a number of factors. In simple terms, you have to make more correct decisions than wrong ones, and you have to do that consistently over time. Of course, it is not quite as simple as that in reality. Making one successful trade might be straightforward, but repeating the process over and over again is the key to success.
That means developing and implementing a strategy. This takes time, careful analysis, and a willingness to take risk. Crucially, you also have to think about what you want to achieve and what type of trader you are. For example, do you want big returns over a short period of time, and are you prepared to accept the high risk that this sort of strategy entails? Or do you want a lower risk strategy that delivers smaller returns but on a more reliable basis?
You have a number of options available for finding this winning strategy. You can do it manually by learning the market and analyzing its current position. You can also sign up for a binary options signals’ service, where all the analysis is done for you either by professional traders or by algorithms. All you have to do is decide if you want to place the trade or not. Or you can implement a strategy that uses a mixture of both.
The first step to getting started, though, is signing up with a broker (such as the options we recommend) and getting a demo account. This will let you run through tutorials as well as practicing your trading strategy, all of which you can do without financial risk. You will learn exactly how binary options trading works, you can test strategies, and you can decide if it is a form of trading and investing that suits you.