Binary Options Trading Guide – Best Trading Sites 2012
Trading binary options is a fast paced, exciting way to trade that has become extremely popular. 2012 marks the year that Binary Options earned their place on the map. Trading binary options for profit can be achieved and many traders are making great returns in this new trading platform. If you are looking for an uncomplicated way invest then trading binary options should work great for you.
Best Binary Options Trading Sites – Top Brokers
- Banc De Binary – Awesome 60 second options
- AnyOption – Outstanding reputation.
- 24Option – Favorite trading platform with early sell option
Why Trade Binary Options – Overview & BasicsTrading binary options are a good choice for traders for numerous reasons. They have a controlled amount of risk and reward. You know exactly what the benefits versus the drawbacks are before you execute any trade. You can measure exactly what your profits or losses are going to be easily. With controlled risk, you can come up with a much clearer cut strategy to define your actions in the market.
Binary options can be profitable.
A good broker will pay 70 to 80 percent returns on each and every successful trade you make. Trades can list minutes. Compare this to typical stock market investing where a total of 5 percent returns over the course of the year is considered to be outstanding! Plus, binary options are different than the traditional options trading you may be more familiar with. Visit 24Option and see for yourself how easy it is.
Binary options do not represent ownership in the assets you are using. Rather, a binary option is a simple guess as to whether the asset in question will go up (call) or down (put) in price over the previously agreed upon timeframe.
This presents a very good opportunity for people already familiar with trading. If you have experience in commodities, for example, a binary option allows you to profit even when the change in price is miniscule. A one penny change in price of a commodity trade will put you at a loss after you take into account the commission and trading fees. But with a binary option you would be considered on the winning end of things.
Binary Option Trading ChoicesBinary options are a very simple one choice or the other. Binary in code language means a “0” or a “1”. Binary in trading language means one or the other.
The best part is regardless of what kind of binary option you choose to trade, you will know up front a fixed risk/return before purchasing the option. You know the risk and the profit potential that you can make at the expiration of the option if you choose correctly. You do not have to be an expert at trading to do well trading binary options. You just need to know which way the market is moving for a particular underlying asset and trade with that information. If you are correct you can make substantial returns in short amounts of time.
You are also not actually buying the asset. You are just making a bet on whether it moves up or down. Or, depending on which type of binary option you are trading you may want the option to reach a certain price or expire within a range of prices for you to finish ‘in the money.’
Magnitude of movement of the asset is also not a factor in determining the payout amounts. It is only a factor on whether or not the trade finishes in the money or not.If you are betting that gold is going to go up and you place a call option then you only care if gold expires in the money (by going up). You do not care how high gold goes per say, just that it goes up. If it barely finishes in the money it is the same as if it goes way up and finishes in the money with plenty of room to spare, you still get the same return.
While you won’t have a binary options strategy that gives you winners every time you trade, it is possible to string together enough winners to become very profitable over the long run.
Now that we know why you should trade binary options, let’s look at the nuts and bolts of how to trade binary options for profit.
How To Trade Binary OptionsTrading binary options is simple by design. You can see a example binary option trade with our quick tutorial. We will start with the most common type of binary option with is an up or down binary option. With this type of option you have a few decisions to make:
- You need to choose an underlying asset (currency pair, stock, gold, oil etc.)
- An expiry time (anywhere from 60 seconds on up to longer time frames. Popular choices include 60 second options, 5 minute options and 15 minute options)
- How much to risk (when you select your risk amount, the return will be clearly listed)
- A direction you think its price will move. If you think it will expire ‘up’ you ‘call’ and if you think it will expire down you ‘put’
Once you select your underlying asset, your expiry time and the amount of money to invest you are left with a ‘one or the other choice’. Binary, when talking about binary options, means one or the other. One choice or another is all you have to pick. And if you pick correctly you can see significant returns.
You can make binary options more complicated, and a winning binary options strategy should do just this. But before you start reading through binary options strategies let’s look closer at the basics of trading binary options.
The short answer is that if you are looking for a less complicated way to trade then Binary Options very well may be right for you. You can see the differences of forex and binary options. You will love trading binary options. They are easy by design.
Depending which binary options trading site you choose, you can trade from anywhere in the world in numerous markets. Binary options have the ability to trade in stocks from most major markets, indices in those markets, worldwide currencies, and commodities. If you want a type of trading that gives you access to these underlying assets all combined into a single site, binary options will not disappoint.
Types of Binary Options – Your Trading ChoicesBinary options come in many varieties and flavors. They are called a few different things like ‘digital options, all or nothing options, one or the other options but are mostly called binary options. You can trade almost anything with binary options. A stock, index, commodity, or currency pair. Some binary options are as short as 60 seconds, others can not expire up to a month.
Types of Binary Options – Flavors
Here are the types of binary options available to trade at the top trading sites.
- Up or Down Options – probably the most common type of binary option trade today. Also called ‘high / low’ You choose if the asset expires up or down
- Touch or No Touch Options – decide if a price is going to hit or not hit a certain target price. Also called ‘one touch’.
- Range Options – decide if the option expires within a range or outside of a range. Also called ‘boundary’
In addition to types of binary options to trade, there are different expiry times. The most common ones include:
- 60 second options – fast paced and expiring one minute after the trade is placed. These are very popular among traders for the volatility and rush of winning a trade in such a short amount of time. We recommend Banc De Binary for amazing 60 second options trading.
- 5 minute options – exciting and swift, the five minute options are quite popular with traders
- 15 minute options – one of the most common binary option expiry times on the market, popular at 24option.
- 30 minute options – another popular trade
- 1 hour options – the longer the expiry time the higher the return
- 1 day options – good if you feel the asset will perform a certain way today
- 1 week options – longer expiry times mean higher returns
- 1 month options – the longest expiry times you will find in binary options
It seems that most binary options traders are trading 15 minute options. Some trade 30 and the ones who love the thrill of making more money in 60 seconds than many people make all week love trading the short term binary options.
Most brokers have minimum and max trading limits. The maximum is somewhere between $1,000 and $3,000 for a single trade. There is no limit as to how many consecutive trades you can make with this maximum amount. As a result, if you have a winning strategy, you can make a lot of money in a single day. Think about it this way: with an 80 percent return rate, you are making $800 for every $1,000 you invest with a winning trade.
Just by predicting ‘up or down’ correctly.
Just a few winning trades will put together a nice amount of money. These limits eliminate a lot of the risk that day trading in stocks and currencies create. For these types of trading methods, you must risk a lot of money to earn a little. Rather than putting so much at risk, you can trade with smaller amounts and still earn a high rate of return.
Binary Trading is a great way to supplement your trading portfolio. While there is still a good degree of risk associated with them, you can manage this risk quite easily because you will always know what your risk to reward ratio is. This simplicity makes binary options quite attractive to many traders.
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