It seems that anyone and everyone is trading these days, from forex to standard stock options, the world has gone investment mad. However, while traders both old and new will always have a soft spot for the more traditional avenues of investment, something a little more cutting edge has arrived on the scene that is grabbing the headlines. Being referred to as “revolutionary” in some parts of the world, binary options trading as a form is gathering serious momentum. What is separating it from other realms of investing is the fact that it allows for online accessibility, asset variety, zero commission fees, and minimised risk.
There is no denying that the popularity of binary options is snowballing, but before you take the leap yourself and start laying your money down, it pays to research the trading format in depth. Helping you get started within the world of binary options is the following guide, which will break down the ins and outs of what this form of investment is all about.
What are binary options?
It is the question on everyone’s lips and one that isn’t actually too difficult to answer. Binary options (sometimes listed as digital options) on a base level are a contract from trade that allows an individual to trade an underlying asset without every having to actually invest in the asset in question, with the asset being traded possessing a predetermined payout percentage. In order to make a profitable binary options trade what an investor must do is predict the price movement of the assets, whether it will go up or on in a set period of time when compared against the current listed price. The goal for every trader is to secure the payout percentage as profit, with the act of trading binary options very much resembling that of traditional betting.
Call and Put
Now, it must be said that before you commit to any form of investment you should research the moves you are making. Saying that, binary options trading has risen through the popularity ranks so quickly because it does prove to be so approachable. With minimal market research almost anyone can grasp a basic knowledge of binary options and how they work. When the time comes to commit to binary options trading there are two choices that will be made available to you:
- Call – To “wager” on the outcome that the price of an asset will improve over a set period of time.
- Put – To “wager” on the outcome that the price of an asset will fall over a set period of time, usually below the noted “strike price”.
It should also be noted that unlike various other forms of investment binary options have a closing time, which is sometimes listed as an expiry time. For example, you can select an asset to invest in and have the proposed position ending time of anywhere between 15 minutes and a month. Working with such time control in place allows for increased trade control, especially when it is factored into a binary options strategy.
Really, when it comes down the “How To” element of binary options trading it really is a simple four-step process:
- Select an appropriate binary options broker.
- Select an asset that you are comfortable investing in.
- Select a binary options trade position.
- Await the results of the trade.
Being honest, the above for steps, while somewhat requiring further detail, describe just how quickly you can be up and running within the world of binary options trading.
How to choose the right binary options broker?
Considering that binary options trading has escalated in popularity as of late, it only makes sense that the binary options brokers market has come to life. Saying that, not all binary options brokers are made equal, in fact they do tend to really vary in quality. It is absolutely crucial that you only work with dependable binary options brokers. Helping you find one that can slot directly into your binary options buying and selling efforts, here’s a few things to look out for.
Firstly, any binary options broker you choose to work with should have proper regulation from a noted governing body. Whether that is the Financial Conduct Authority (FCA) driven or otherwise, there should be a force in place that ensures that the broker maintains good practices. From regulation to reputation, customer service is absolutely pivotal to binary options success. While a broker can’t help you pick a “hot” asset, nor can they prevent a crumbling loss, they can ensure that you are able to trade in a problem-free environment thanks to attentive customer service.
Versatility is another factor that a high-end broker till have, as they’ll open up the door to countless different trade types, with all the additional bells and whistles. It should be noted that a binary options demo account for practice trading could also be of great use to novice traders. Finally, binary options are ideally a liquid form of trading, which means cash access is an absolute must. You want to be able to access your money and move it around as you wish, so you must ensure that your chosen binary options broker has the means to allow for this.
Always remember, a binary options broker can make or break your entire binary options trading experience.
How do binary options signals work?
Following on from the above, what separates great binary options traders from bad binary options traders is binary options signals. Considered to be controversial in some sectors due to its often-automated nature, binary options signals represent a collection of attributes that signify when it is the right time to make a trade. While once simply a “standard” part of the industry, such has now taking on a life of its own. Through dedicated services, traders can now be linked to these signals directly. How this works is that experienced traders (or teams of traders) monitor the market and issue signals to traders that subscribe to a related service, who would otherwise have to monitor and analyse the market independently. When it comes down to it, binary options signals tend to take the hard work out of the equation when it comes to trading, but it must be noted that such process isn’t bulletproof.
Moving forward with binary options
The way that people trade and invest is changing, as binary options trading has given people quick and easy access to the markets under “betting” means. As you can tell from the above, it presents something different from other forms of investing and is clearly more approachable and applicable to more “casual” traders. What gives the format an edge is the fact that it embodies limited risk, as traders are able to move money around at minimal levels. Throw that in with the high rewards, fast returns, simple trading mechanism, vast asset access, and consistent availability, and it becomes increasingly clear that any and all with trading aspirations should turn their attention towards binary options trading.