A Brief Guide to Understand Binary Trading Options

by Editor 2,571 views

In binary options trading, investors can benefit from speculating the price movement of different instruments like currency pairs, stocks, indices, and commodities. It is a simple process, where the trader has to decide between ‘Call’ and ‘Put’.

There is no need to purchase the physical asset as such. You will need to predict if the value of the asset will increase or decline, within a specific timeframe. In binary options trading, you will put your money on price movements, and not the physical assets.

There are different types of binary options trades that you can opt for. Before getting yourself involved in online binary trading, it is important to know about the available types.

Different kinds of binary options

Put & Call trade option

  • ‘Put’ option is placed, when you feel that the value of selected indices or stock will decline within the specific time period. If the prediction turns out to be right, then you make a profit.
  • ‘Call’ option is placed, when you feel that the price of the underlying asset will increase. If this really happens, then you make a profit.

Touch binary option

You can select to place a boundary, for price level to go either above or below the existing price. As soon as the value of the underlying asset reaches the pre-determined price, within a specific time, then your trade is a winning one. Even if the asset price touches pre-determined level and then declines, you will still make 100% profits. If the value does not reach the pre-determined level, then you lose.

Early exit option

If you feel that your prediction is wrong, then you can exit early from a trade position, but you will still be charged a fraction of the amount.

60 second trade options

This kind of binary options trade lasts for just 60 seconds. Traders, who do not wish to wait for standard expiry timeframes, can opt for the 60 second trading type.

Binary Options – Tradable Assets:

  • Indices – Worldwide stock exchange markets are available for binary option trading. Traders find indices attractive, because there is no need to invest in shares and stocks, or even pay a hefty fee to the stockbroker.
  • Forex and currencies – Binary option on the basis of currency pairs allow to hedge against the fluctuations. You can pair with all the major world currency pairs without any restrictions.
  • Commodity – Buying of gold, silver, oil, or coffee is costly, but binary option trade allows for earning profits by predicting its price movements, without actually buying the commodity.
  • Stock – For many decades, investors have been trading on stocks. Prices of stock fluctuate due to public demands and market sentiments. Stock trades are risky, but you sure can gain good experience, and then take advantage of the market.

Trade diversification

Lesser tradable assets will restrict you from taking full advantage of potentially profitable opportunities. Therefore, you must make sure that you select a broker platform, where you get to trade on large number of assets.

Binary options trading is simple. However, you cannot expect to make consistent profits just go guesswork. It is important for you to study price movements, market behaviors, and conduct appropriate technical analysis, before making the decisions to ‘Put’ or ‘Call’.

In trading binary options make an informed decision to reduce your odds. Also, avoid guaranteed or sure-fire tips from forums or gossips. Remember, there is no fixed strategy in binary options trading.