BINARY OPTIONS TRADING
If you know what binary options are then you have no need to read this bit, and you may want to go to one of the relevant reviews of option trading companies we have carried out – navigation to the side. If you have never traded in options before or no nothing about it, then read on!
Binary options are a financial instrument whereby an investor can attempt to predict which way and by how much the value of a commodity, stock, currency or index will move within a given time frame.
Binary Options Trading is effectively a way to bet on movement within the financial markets. For example, you could take an option on whether you feel the value of the US Dow Jones Index is going to increase in the next hour. If you make the right prediction you get a return on your investment if you get it wrong your stake will be lost.
Although the concept of Binary Trading is easy to understand, making accurate predictions on movements within the financial market has proven to be an elusive goal. However, if you are prepared to put in the work and develop a system, you will greatly increase your chances of being able to make a living from this form of trading.
Binary trading attracts investors for a variety of reasons, the potential for very large returns being the major one. Couple this with the fact that these returns can be derived from relatively low levels of investment and it is easy to understand the rapid growth of this financial investment option.
With Binary Options the underlying asset is never owned or purchased by the investor, as an investor, you are simply trying to predict the movement in the value of that asset. Therefore, the size of your investment doesn’t need to be tied to the value of what you are working with. Most brokers will allow a minimum investment of $10 which makes binary trading an easy entry into market trading.
There are many different types of binary options, the most common being the high-low option. Let’s say you have done some research and feel that the value of the US dollar is going to rise against the Euro in the short term. You decide to buy a binary call option on the US dollar. You will need to look at the time frames offered as there is a wide selection available. Some will take an option over a longer period and some like to work in the short term.
Your prediction is that the value of the US dollar will rise against the value of the Euro within the next hour, so you invest $100 in a call option that expires in one hour.
If you want to know more, read our binary option trading guide.
It is important to note:As of 2nd July 2018 Binary options are prohibited within The European Economic Area (EEA) for retail traders. If you live within the EU and are not a professional trader you will not be allowed to trade Binary Options.