WHAT’S BINARY OPTIONS?
About Binary Options
Binary options trading is completely different from regular options trading. They differ when it comes to the risks you will face in trading, the fees, the payouts and the structure of its liquidity and the process of investing. So even if you’re already confident in your skills in regular options trading, you still can’t plunge into binary options trading without learning the ropes.
Binary options are considered exotic options. Exotic options are simply regular options with a certain feature that somehow make them complex. In the case of Binary options though, they do have features that make them stand apart from regular options but that does not necessarily make it more complex.
In fact, the truth is quite the opposite. A binary option is a sort of financial option where the payoff can only either be a fixed amount of money or nothing. Binary options are also sometimes referred to as digital options, fixed return options or all-or-nothing options.
Will the value of an asset go higher than a certain price after a specified amount of time? When you trade binary options, you will have to this question with either a yes or a no. If your answer happened to be right, then you will get a fixed payout ranging from 50% to 90%. If you’re wrong then you will lose the amount you invested, though there are times when you’ll get 15% back.
How to trade Binary Options
A lot of people can’t get started in Binary options trading simply because they are intimidated by the process. But the thing is, you don’t have to do anything too complicated to start trading. In fact, you can start doing Binary options trading in 6 steps.
Step1: You should choose a broker, or brokers, that will fit you. Check out what Binary options brokers can be used in your country and read the reviews about them.
Step2: Create an account on the platform you choose. The minimum initial deposit can vary with each Binary options brokers.
Step3: Select which assets you want to trade. The assets that are available for trade are also different for each Binary options brokers.
Step4: Settle on how much you will want to invest in the asset you chose to trade. The payout or returns for the asset you chose will be listed out.
Step5: Decide whether to call/put- call if you think the value of the asset will rise and put if you think it will fall.
Step6: Check every detail of the trade and then confirm.
Once all of that is over and the given time is up, you will immediately know whether the decision you made is correct or not. If you happened to get it right, you win and get the payout. You see, there really is nothing complex about doing the trade.
All you really have to do is gather enough knowledge to make an educated guess when it comes to deciding whether to call or put and how much to invest in a certain asset. Sure, that can be quite scary but then again, trading always comes with certain risks. Those risks, though, can also turn into heaps of benefits once you really learn the trade.
Strategies in Trading
There is a vast number of strategies that you can use in Binary options trading. But each and every strategy in Binary options trading can be listed down under two groups. You can’t possibly try them all out so the key is to look at the top strategies and choose the one you want to focus on.
Market Behavior Strategies
In strategies categorized as market behavior strategies, you will have to make your decisions based on data, both the technical and statistical. The data may be already available (some brokers provide them) or you, as a trader, yourself can do your own research and work on it. No one will claim that market behavior strategies are easy to understand and perfect.
However, these strategies are the easiest to trust and rely on. That is because you will be basing your decisions on facts. If you are not a fan of statistics and everything related to it, you can check out some techniques that will help you in understanding data and charts to make using market behavior strategies less complicated.
Betting model-based strategies
Do not let the name fool you. When you say betting model-based strategies, it does not mean that you will close your eyes, trade and leave it all up to luck. You will just be wasting your time, efforts and money if that is what you will do.
In betting model-based strategies, however, you will be using betting strategies. The strategies under this category use certain schemes that will make the probability of winning a trade go higher. That means you will still come up with a decision based on something and not rely on luck alone.