Binary options is one of the easiest types of trading on financial markets.
It can be described as prediction of underling asset price movement, the outcome of which is bringing a trader up to 90% of the invested amount profit in the event his prognosis turns up to be correct. If the price moves the opposite direction from predicted a trade will lose up to 100% of his investment, unless he chooses to close a losing position earlier in order to minimize the loss. The action evolves around current market price of the assets (currency pairs, commodities, indices or stocks), called strike price. In classic High/Low or Call/Put type of binary options a trader decide whether the price of an asset at the moment of the option expiry (life time of an option) will be higher or lower relative to the market price at the moment when a trading position was opened. Options can be set to expire from 30 seconds to several minutes, hours days or even weeks. Binary options trading tools include long term options, one touch option, ladder options, social trading, advanced charts and many more.
Trading process of Call/Put binary options
Trading tool can be broken down into 4 simple steps:
1) A trader is choosing an underlying asset from a range of currency pairs, commodities, indices or stocks. Most traders specialize on certain assets: some prefer to trade on currencies such as EUR/USD, GBP/USD etc., others choose gold, coffee, corn (commodities) or Apple or Coca Cola shares.
2) A trader is choosing an expiry time. One of the reasons why binary options are so popular amongst novice traders and pro investors alike is their short term nature. No other financial instruments provide for such quick profits as binary options. Life time (expiration) can be as short as 30 seconds!
3) A trader is entering an investment amount. Most brokers set investments amounts between $25 and $1000 in average, some allow to start with $1 investment, which makes binary options trading affordable for everyone.
4) A trader is predicting a direction of asset price movement, opening a position by pressing Call or Put button and waiting for the outcome. If the price changes according to the trader’s prognosis a trader receives between 65 and 95% profit on the invested amount. Binary options payouts are rather high and the amount of potential profit or loss in known in advanced. Such limited risk is another factor that draws traders to that market.
Binary options trading process is so straightforward and easy to understand that it can be mastered in a matter of minutes. Some binary brokers place all kinds of trading simulators on their web-sites which help novice traders visualize trading process and gain confidence prior to opening an account.
Binary bonus is one of the binary options trading tools which raises a lot of discussions amongst traders, as some of them find it quite tricky or confusing. We would like to emphasize that binary options bonus is offered in a form of leverage, that means that it is used for trading purposes only and can not be withdrawn. Binary options bonus normally comes with some type of turnover requirements meaning that prior to withdrawing profit generated with the use of the binary bonus, a trader should place a number of trades, total volume of which should be equal to the amount set by the broker and clearly communicated to the trader. Binary options bonus offered by a broker in a form of withdrawable cash, or bonus that locks money on a trader’s account should raise a serious concern and terms and conditions of such offer should be carefully examined by a trader. If a trader can not or does not want to fulfill binary bonus turnover requirements, he can request a broker to cancel the bonus at any point. Please note, that in this case all profit, generated with the use of binary bonus will be forfeited. Binary options bonus is a very safe and useful trading tool when it is offered by a regulated broker. Remember, it is illegal for a broker to lock funds on a trader’s account for any reason.
Another binary options trading tool that most traders find extremely helpful is mobile applications. Freedom of placing trades any time in any place where Internet connection is available opens a realm of opportunities to professional traders. Market events can cause prices to move at any time and the more trading tools you have at your disposal the better your chances are to secure a winning position and generate profit.