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Understanding Binary Options

Binary Options

Are you an options trader? Are you curious about binary options? I was aware of options but not binary options. Let’s have a look.

Binary options provide traders with an easy alternative to complicated institutional trading. When it comes to binary trading, there are only 2 possible outcomes – in the money or out of the money. Traders are required to simply pick an asset, and predict the direction of price movement at a predetermined time. The good news is that you will actually know what the payout is at the initiation of the trade. If the trade does not go your way, you just lose the initial investment amount.

Fundamental and Technical Analysis in Binary Options Trading

Binary options trading is markedly different from gambling, because the fundamentals of asset trading are rooted in economic phenomena, market movements, geopolitical crises and other interrelated criteria. Traders who understand the underlying essence of specific assets – currency pairs, indices, stocks and commodities – have a much greater likelihood of making the right decisions. The very first thing that traders will be tasked with doing is selecting their underlying asset. Take note that you do not take physical position of any assets, these are options.

Next up, you will be able to make a decision regarding precisely which timeframe you wish to trade in. With binary options, you have many different possibilities available to you, and it’s possible to turn significant profits within a really short period of time. A caveat is in order – markets go up and down, so traders must be prepared for this eventuality. Typical options run from 60 seconds to as long as 365 days. Of course, it is incumbent upon the trader to choose the timeframe that best meets personal preferences.

When it comes to binary options trading, there is no substitute for putting in the time. Traders can gain a much better perspective of real market conditions by practising on a demo account prior to trading for real money. The demo account mimics real money trading, with zero risk on the part of the trader. Once you have understood the fundamentals of how asset prices move, and how to maximise things like binary options signals, binary alerts, and binary options trading platforms, it is easier to trade for real money.

Generate Profits in Rising or Falling Markets

Some of the most common ways to trade include making a prediction as to whether the market will rise or fall at a predetermined time, from its current level. If you believe that the market will move in a bearish fashion – downwards – you would place a put option. If you believe that the market will be bullish – upwards – you would place a call option. The beauty of binary options trading is that you can turn a profit even if the market is bearish.

Binary options traders know well ahead of time precisely how much they stand to gain, or to lose if the trade ends in the money, or out of the money respectively. By placing a real-money trade, you may qualify for a generous welcome bonus package. The binary trading platform is intuitive, highly interactive and geared towards maximum trading potential. A wide range of assets is included, across multiple categories.

Related: Stock Options for Employees

Readers: Do you do options trading? What about binary options?

Image courtesy of ArtJSan – FreeDigitalPhotos.net

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One Response to "Understanding Binary Options"

  1. Paapaa says:

    I think binary optionas are complete waste of time and especially money. They are priced so that you WILL lose your money in the long term and basically they are just gambling. The expected value of profits will be negative. The short term price fluctuations are 100% random in practice. You have been warned – forget these.

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