Binary Options Guide
You may have heard of binary options and wondered what they actually are; they often sound far more complicated than they actually are. In fact, it is one of the easiest ways to start trading on the stock markets without needing to expend vast quantities of capital. Although there are similarities between binary options and other methods of investing, it is a very simple process to learn and implement. Of course, experience and knowledge will help you to make the right trades and become a very successful trader.
Binary options works on a simple principle; you decide whether an asset will rise in price or fall; you can then buy an option which reflects your prediction. It is important to place a time scale on your prediction as this forms part of the trade. Once you have purchased your option you simply wait until the agreed time has elapsed. If the price has moved in the direction you predicted you will gain a return on your investment. If it has not then you will lose your investment.
It is important to note that trades can be as short as sixty seconds and rarely go past the end of the day; although it is possible to trade for a few days or even longer term. These short trades can rapidly increase your funds; providing you get the predictions right!
Your profit is fixed before you start any trade; this means that you know exactly how much money you can make and how much you can lose. This will help you to control your exposure and restrict the amount of funds you trade in one day; something that should be of benefit to anyone new to binary options trading.
Provided the price of the asset moves in the direction you predicted you will get your return. It does not matter how much it moves in this direction. Your return is based on a correct prediction and not the amount of the movement in the asset price. The agreed rate of return is payable as soon as the trade ends and will be credited to your account. It is also possible to get bonuses which can be credited to your account and give you free funds to play with; this can be of great benefit when you are learning how to trade in binary options.
In fact, many brokers will offer you the opportunity to trade with a demo account. This will give you the opportunity to understand how binary options work and the best way of generating a good return on your investment.
Of course, there are many ways to trade in binary options; the most basic strategy involves predicting a general price direction; you can also predict a price that the asset will touch or even when an asset will reach a high and low price. Every strategy has its advantages and disadvantages, as you learn them you will be able to decide which best suits your style of investment.
The funds you will receive are the same, regardless of how much the price moves. Learning to predict price movements correctly can be very satisfying and lucrative!