You have been wondering what are binary options. If you have been searching around internet for earning money or maybe you saw how simple is to trade binary options then you must have seen this term but now you will even know and understand for sure what binary options in detail but first you should know they are known as digital options and are available to us to trade from year 2008. To put all this this into a more practical way, there are two possible ways for a trade to close in binary options. One is in the zone or in the money, that is when the traded asset is within the specified trade and will get the money or out of the zone so called out of the money, when the trader is out of the specified trade. And that is why binary options are appealing to more and more people, because of the simplicity that lays in them!
When you search online for binary options explanation and to get better understanding of what this is, most of the results suggest you to stay away from it or they are promoting their broker to get you in. That’s why we decided at binaryoptionszone.net to give you all the required info on binary options to satisfy all your hunger for information and serve it to you here.
What you will learn right now:
- How binary options trading works?
- Why would you trade binary options?
- Type of assets you can trade with binary options?
- What types of trading binary options exist?
- Where to start? Can i start small? Where to learn?
HOW DOES BINARY OPTIONS TRADING WORK?
As you have read, you know now that binary options are based on putting a CALL/UP or PUT/DOWN button so i would suggest to take a look at the graphical example of what we have just said:
As you can see the both trades are winning trades because they are in the zone of what we choose. Lets focus on the first one. Benjamin is a trader who decided based on information that he gathered that this trade will go up from the point where its shown in the image. As you can see, if the chart stays in the green area, it means he will win the trade if it stays there till the specified time of expiration, if it would turn around and chart would fall bellow the green area and would end at the time specified at the beginning of the trade, then the trade is lost.
Second one is basically the same as first, only thing is its reverse since Benjamin decided that the chart will stay in the lower area, orange as you can see when the expiry time comes.
This is what binary options is about. You choose the asset you would like to trade, get as much as info as possible for that asset to determine fundamentally if it will go down or up from the start of your trade till the end of expiry time. Before you start putting in trades because you think you are right i also suggest to learn more about technical analysis and charts so you also understand this part because at the end it comes down to that and timing. If you check back at the picture you can see if we would take another start of the trade then the trade could turn out differently.
WHY WOULD YOU TRADE BINARY OPTIONS?
You have to know that there is no such thing as being certain in trading, even in binary options. So please get that out of your head even you have some secret formula to success or you have read somewhere it is possible. That being said you also have to know there is big potential to profits if you put some time and dedication into it and approach it with the right mentality. There are several good reasons why you can benefit from binary options and start trading:
- Easy to understand! That is definitely one of the first reasons because when you will go through this article you will theoretically know what binary options already are and you did not even put one trade through. You have learned that you can profit if you know which way the certain asset will go in certain amount of time. If you can achieve that, you will be profitable.
- Predefined risk and profit! Before you place a trade you already know how much you can profit from it, industry average is around 80-85% return if investment, so if you start small, even with 250$ you can turn that into 500$ in relatively fast amount of time. You can also turn to the other side if you are not careful and lose the trade but most of brokers have refunds in place so you are left with something – be carefull!
- No need to be financial wizard! You do not need economics degree to know how to trade binary options. This may be true for other investing opportunities such as Forex which is more hard to learn with more variables.
- Become better! If you will successfully learn the art of binary options trading you will also see that you will benefit on other areas of your life. That is simply because with trading you learn self-discipline and knowing your limits.
WHAT TYPE OF ASSETS YOU CAN TRADE?
What is an asset? An asset is usually known as an underlying asset and that is term in finance which describes items that are available to trade internationally. Assets are basically the base of binary options and you 100% know them and have heard of them. Depending on the broker you will trade with you can choose from wide range of assets, these include Forex, stock, indices and commodities. We are trading the assets we just mentioned and we win or lose based on the pricing movement of these assets. As an example, Benjamin was gathering info and thinks that XYZ asset will be above or below the opening trade when the expiry time comes and if he is right, he receives a profit.
STOCKS. Stock is a share of a certain company. Companies give out shares so they can raise more capital for themselves in return they give you their stocks. You can trade without them, so you can buy or sold them. If a certain company is doing well and is making profits the stock price will go up and if there is anything wrong, the price of the stock will go down. With binary options is a little differnt because you are only trading in which direction this stock will go in certain amount of time.
Examples of stocks: McDonalds, Coca-Cola, Starbucks, Google, Apple, etc…
COMMODITIES. These are goods that you can touch, they are in physical shape like rice, wheat and corn. Prices of commodities are affected when something happens, could be political or environmental.
Examples of commodities: Gold, silver, wheat, corn, cotton, oil, rice, etc…
CURRENCIES. They represent certain country like USD is for united states or like EUR for European union countries. But you are not trading one, you are trading pairs because that is how fluctuation occurs. For example if we take a look at EUR/USD pair. If there are some bank news involving EUR that will effect the price of this pair.
Examples of currency pairs: EUR/USD, EUR/GBP, GBP/USD, USD/JPY, etc..
INDICES. This is a plural term for index. Index represent a group of companies and its verges them into one index. One of the most popular and known ones is definitely S&P 500 which represent top 500 traded publicly traded companies in US.
Examples of indices: NASDAQ, S&P 500, DOW JONES, NIKKEI
BINARY OPTIONS TRADING TYPES!
Since this industry is growing fast, there are far more options trading out there such as touch options, boundary options, up/down and even 60 seconds trading which is really fast ROI if you know what you are doing. Lets take a look at what type of options you can choose from:
HIGH/LOW. This is where a trader has option to determine if a price of certain asset will move above or below strike price by the end of the expiration time. Basically what that means is at the start of trade you have to determine if at the end of expiration time the price will be higher or lower. If you get it right, you have profited.
TOUCH/NO TOUCH. Here as a trader you have to determine and predict if your asset of choice will touch determined price or not before the time will expire. It just has to touch one-time to win the profit if you choose the touch option. it must not touch even once if you have choosen no touch option.
RANGE. You have to choose as a trader that a certain asset will stay within the boundaries after the time will expire or will it be out of the range. This type of options can be also known as boundary options.
60 SECONDS. This is a fast type of binary options expiry time. It is basically high/low but with a one minute expiry time. You have to determine if certain asset will be higher or lower of when you have started this trade and the expiration time is 60 seconds. So you have ability to profit fast. But be careful.
There are even more options trading such as Multi-trade, short options, matrix, strike and Japanese ladder but these are for professional traders and too complicated. Which type works the best for you really depends and that is something you will have to learn on your own when you will start trading. I suggest you first try that on demo account and then when you see success, start replicating that in the real account otherwise you will exhaust real account and be without money. Learn first then trade with real money.
WHERE TO START?
I would suggest you go through our binary options basics program and then advance your way up to expert. This is your best chance to be succesfull at this business. Another good thing about binary options is that you can start relatively small, even with 200$ but i would suggest you to learn in demo account first – that is a must if you want to turn your initial money into something more then just a loss and another potential negative thing in your life. I think you do not need that. In your first steps you will make trials and errors and you have to try it with virtual money. You have to get to know with the platform that you are going to work with and get familiar what to press to start the trade and read the charts. So essentially its the same as learning to swim, you go slowly into the water and start trying, you do not just jump into it and act like professional because water would drown you, so here, the market would eat your money away.
Here we are at the final steps! Choosing the right broker for you and that is one of the hardest things and challenging. Why is that such a problem? Because you can make money but if you have it with wrong broker, you can have a nightmare to withdraw it. Many of the websites are scam websites so you have to make sure who you are giving the money and that they are regulated by some financial institutions, that is why we have created a list of recommended brokers you can trust and work with. This list is always checked to make sure everything is in order. Click here to check recommended brokers!