Basics of Trading Binary Options
Binary Options are relatively new to the financial or trading world but within a few years have completely surprised the online trading community via Binary Options trading Platforms. In fact, Binary options allow traders to trade with different underlying assets such as stocks, commodities, indices and foreign exchanges.
When you open an account with a broker you will get full access to the trading platform, whether you use a computer or some sort of mobile devices. This trading platform allows you to open positions around the clock from anywhere in the world if you are connected through the internet.
Most platforms do not require software downloads that means you will be eligible to access your account to view your current positions, making new trades, perform deposits and withdrawals after logged in to your brokerage account. In trading industry, it is usual for brokers to engage you to join their system by offering awards and bonuses to help you to create your individual portfolio.
Binary options trading is simple for day traders and it is beginner friendly. For binary trading, all you need to apply a few steps to execute a trade:
- 1st Step: In the first step of binary trading, you need to select an asset.
- 2nd Step: In this step, you need to predict the direction of the underlying asset’s movement.
- 3rd Step: In the third step, you have to determine the expiry time of your trade.
- 4th Step: This is the last step of trading. In this step, you need to input the amount that you want to invest.
Binary options are also known as Fixed Rate Options. Which means, the amount of loss or profit in a particular trade is fixed when the trade has been placed. For Example: If a trader placed a trade worth $1000 with a payout 85%, if the trade become successful then the trader would receive $1850. Since, binary options are FRO, it does not matter how many pips of an asset moves. It depends only on the direction.
Those trades which land “Out-of-The-Money” tend to lead to a full loss of investment unless you are trading with Option Builder that lets you to select your own win/loss ratio.
Your initial deposit is not the money that you are paying to your broker for expenses. This deposit amount will remain in your account so that you may trade or invest. The minimum deposit amount is not same for all brokers. It differs from one broker to another. You don’t need to pay traditional broker’s commissions or the spread fees. In Binary Options Trading, these fees simply do not exist.