In simple words, binary options is all about predictions you make on the behavior of an asset in the financial market. It doesn’t matter if we are talking about commodities such as silver and gold, currencies such as Dollar and Euro, indices such as Dow Jones or Nasdaq, stocks such as Apple or Facebook, all you have to do, is to predict whether a certain asset price will either rise or fall within time interval which begin at 30 seconds and up to a year. It might be risky but can also be very profitable!
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How to start trading with binary options?
Trading with binary options it’s very simple, and the operation is very easy. Want to start trading? Follow the steps below:
- Pick a binary options broker from a wide portfolio of internet providers. Before you decide, you should check the reputation of the binary options broker by reading reviews about it. Knowing what other traders think about a broker is key in making the right decision. The right broker should be well established and must have been in the business for a few years.
- Choose an asset you want to trade with, no matter if it is stocks, currencies, indices, or commodities. Take into account that it is good to have some background on the items that you are trading with, as we are talking about a move where you can win or lose all the invested money. Study the market and check the statistics to be sure you know what you are doing.
- Decide the direction that you think the asset will take in a time period. Based on the information you have gathered about the asset, you will have to predict if this asset’s price will increase or decrease in a stretch time that can go from 60 seconds to a few hours. Note that each asset offers different revenues according to a variety of variables.
Practical example to understand how Binary Options work
- Let’s say you are a Binary Option investor and you purchase a Facebook binary option for $100, when the shares are at a price of US$ 30.50 (this value is not relevant to your purchase, what is important is the positive or negative change of this value).
- At the moment of the purchase you speculate that at the end of an hour Facebook’s shares will be higher than the current value (it means higher than US$ 30.50).
- If at the end of an hour Facebook shares cost US$ 30.70, the Binary Options broker will pay you around 70% return on your investment, which means you will get back US$ 170.
- If instead of increasing, Facebook’s shares decreased to US$ 30.40, the return to the investment is zero, although some brokers can promise you a return of 15%, which means you will get back US$ 15.
- When you decide to buy the binary option, you are in fact buying a contract in which you agree you can either receive 70% return to your investment or no return at all.
Binary Options Strategy
Trading with binary options is not just about following your instincts. When you trade with binary options, although you don’t own the assets, you do need to predict what direction the price of the stock will take at a determined time period, so you need to know what you are doing. You can start trading with binary options with a small capital as 100 dollars, which isn’t a lot of money, but it doesn’t mean that because it is not a lot, you don’t mind to lose it, so get prepared as well as you can to earn as much and as fast as possible.
Binary options trading is very easy to operate, and can bring you up to 70 percent on revenues in a matter of minutes. Sounds lucrative? It is, but it also has its own issues. As with every kind of investment, a complete understanding is crucial to success.
Getting a good binary option broker is an important ingredient as the market is full of complaints of traders claiming unfair brokers’ practices, but what matters the most at the time of trading is choosing an effective trading strategy.