A binary option is a financial instrument with a fixed cost and with a predefined potential payout. To trade Binary Options, the investor of a binary options will make a forecast as to where the price of the underlying asset will go at the time of purchase or when the trade has been placed. If the forecast or prediction turns out to be correct then it will result a profit. When the forecast turns out to be wrong then the risk only the cost of the particular option.
How do I trade Binary Options ?
The process of placing a trade is very simple and easy to understand. In order to trade Binary Options, you have to follow four simple steps to execute a trade. These steps are quite simple and an unexperienced trader can understand very easily.
Select: It is the first step to place a trade in binary options. In order to trade Binary Options you need to select assets first. Because, trades are made based on assets. You have to choose the trendy products that are reputed and has the ability to give you profits.
Prediction: To gain profit you need to predict the direction of the asset that you have selected in the first step. Your profit or loss depends on your prediction. You can make the perfect forecast by analyzing market trends of the underlying asset.
Expiry Times: You need to select the expiry time before placing any trade. The expiry times depend on the market conditions and on the assets. In binary options trading, you will be able to select different expiry times as your choice. But if the trade has been placed then you will not able to do anything until the expiry time expires.
Amount of Investment: This is the last step of a particular trade. You need to select the amount that you are willing to invest in a specific to trade Binary Options. However, you need to analyze the market before placing an investment.
What possessions can be traded in Binary Options ?
Unlike other trading platforms, Binary Options have a vast area of assets to be traded. There are four main categories of assets are available in binary options.
Like traditional trading, In Binary Options, Stocks represent an organization’s trading ability of the stock exchange. You have to select the best company that has a good reputation and also a good market trend. There are many companies are available in the world. You can choose any of them if the stocks are available to your broker.
Top 3 Stocks
Apple Inc. – Apple is the leading tech company of the world. This company is popular for their unique mobile device “iphone”. Apple’s stock symbol is AAPL.
Google Inc. – Google is famous for their search engine and many online services. The stock symbol of Google is “GOOG”.
Vodafone – It is the world’s largest telecommunication company. The stock symbol is VOD.
However, you can choose Citigroup, Microsoft, Nike, and Coca Cola also.
Commodities are the great option when you trade Binary Options. There are many commodity assets are available on the binary options market.
Top 3 Commodities
Crude oil – The oil is also known as petroleum in the terms of unprocessed oil. Mostly traded in NYMEX (New York), ICE futures, DME (Dubai) and the C-COM (Japan).
Coffee – This is the second most popular commodity. Mainly traded through the NYBOT (New York), KCE (Japan), SICOM (Singapore) and Euronext (Japan).
Gold – Gold is most popular commodities in binary options. Currently, China is the top gold producing company (previously South Africa).
You can also choose natural gas, corn, sugar, platinum.
Currency pairs means the exchange of two different countries. This is the most popular category to trade binary options. Most of the traders love to trade binnary options with currencies.
Top 3 Currency Pairs
EUR/USD – This currency pair has the highest order flow and thus the best liquidity in both forex and binary options markets. Trading of EUR/USD currency pairs will typically have lower amount of volatility so that it is particularly suitable for beginners.
USD/JPY and USD/CHF – These currency pairs also have an advantage. Typically, these currency pairs have a very strong order flow and sometime have too little “Action”.
AUD/USD and USD/CAD – These currency pairs have a less liquidity than EUR/USD. Therefore, the movements of these currency pairs are sometimes very surprising and often unexpected.
Indices enable users to trade on a group of stocks traded on the major global markets. In fact, the trader in this instance is looking at the overall trend across this group of stocks which representing a performance indicator of the overall market of that region.
Top 3 Indices
Dow Jones Industrial Average – The short form, DJIA, is a price weighted average of 30 individual stocks from both the NYSE (New York) and the NASDAQ.
S&P 500 – It is a US stock market index that contains stocks of 500 large corporations that are located in the US.
CAC 40 – It is the French stock market index that tracks 40 of the largest stocks in France based on their market capitalization.
You can choose CAC Future, DAX, Tel Aviv 25 and Hang Seng also.
Trade Binary options is very easy and novice friendly. There are no complex terms in binary options, so a new trader can easily understand the core parts of Binary Options. However, to be a full time trader, you need to have patience for learning, analyzing and of course a steady mindset.
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