A binary option is when a buyer enters into a contract to purchase an underlying asset at a fixed price at a pre-determined time in the future.
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Binary Options Trading
Binary Options Trading is a type of trading that allows investors to partake in stock, commodity and currency pairs trading, just with less risk and smaller premiums.
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These types of binary options are comprised of not just a single stock but of an index of many stocks, giving the trader diversification and opportunities to trade in particular sections of the market on a larger scale.
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Index Options Trading
This type of binary options trading deals with index options that are not just single stock options but indexes comprising of many stocks.
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The Forex, or the Foreign Exchange Market is an international market whereby foreign currencies are exchanged for one another. One of the largest financial markets in the world, it operates on a 24-hour basis through a non physical global network of banks, corporations and also individual currency traders.
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In binary options trading, when trading in Forex options you are predicting the movement of set currency pairs like EUR/GBP (the euro against the pound) or AUD/USD (the Australian dollar against the US dollar). These currencies make up one of the largest financial markets in the world, otherwise known as the Forex, or the Foreign Exchange Market where traders can deal 24-hours a day, 5 days a week. Trading on how well a particular currency is doing alongside another, traders can make informed predictions on currency pairs and with the added comfort of short expiration times that is common when trading in binary options.
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Forex Options Trading
When dealing in forex options trading you are predicting the movement of currencies against each other, comprising as one of the largest profit gaining financial markets in the world, the Forex (Foreign Exchange Market).
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A commodity is a physical raw substance that is sold or bought by investors across the financial market.
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When investing in commodity options you entering into contracts that give you right, but not the obligation to the movement of a commodity stock in the market. This means that, instead of buying stocks outright and falling victim to the either profitable or non-profitable price outcome of it, you are simply predicting the movement of the commodity and whether it will rise or fall.
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Commodity Options Trading
In binary options trading, trading in commodity options allows investors to trade in some of the most well known commodities in the market, such as gold, oil, silver and copper. Thought by many as an easy market to trade in, there being only forty commodities to trade in, and easy to follow, with movements often relating to world affairs, it is an attractive option.
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This is the plural term for a singular index. In the stock market, indices are groups of stocks put together in particular ways, representing a portfolio of stocks or commodities.
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Currencies are traded in pairs, trading one currency against the other. Currencies rise and fall according to the markets demand for it, rising if the market’s demand for it is greater than the available supply and falling if the demand is lower than it. All financial trading of currency pairs takes place on the Forex, or the Foreign Market Exchange.
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A stock is a small share or piece of ownership of a chosen business or company that gives the owner claim to a share of their earnings.
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When you purchase a stock option you are entering into a contract that deems you the right, but not the obligation to its shares. In other words, you are not physically purchasing a stock outright and relying on the stock doing well, you are simply predicting the direction that the stock will move and betting on this outcome.
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Stock Options Trading
In binary options trading, trading in stocks is always a popular choice for investors. With big, well known names featuring in the market, it is easy for investors to keep up-to-date with breaking news and sudden changes and fluctuations to their chosen stock.
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Binary Options Trading Platform
There are many different types of Binary Options trading platforms. All web-based, they allow investors to trade binary options on selections of stocks, currency pairs, indices and commodities. Each trading platform competitor offers unique trading benefits to the investor as they each contend to be the most worthwhile trading utility for customers.
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Binary Options Brokers
Binary Options Brokers or binary options trading platforms are online internet based sites whereby investors can trade in binary options from the comfort of their very own computer screen. Each broker is individual to the next, each offering investors a plan with varied attributes.
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A digital option or a binary option is an investing route in which the pay-out of the stock is pre-determined in the contract from the onset of the purchase. Also known as the “all or nothing route”, when an investor purchases a digital option there are only ever 2 possible outcomes; 1. An in-the-money result will earn the investor the fixed return plus their original premium back or 2. An out-of-the-money result will deprive them only of their original premium, and in some cases even compensate them with a 15% return.
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Fixed Return Options
In binary options trading, fixed return options offer many investors a safer way to invest in the stock market than conventional stock investing. The benefit to the investor of making a purchase with a fixed return is the security of knowing exactly what they would earn if the option finished in-the-money.
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In binary options trading, a call option is what an investor purchases when they believe that the chosen stock will rise above the current price.
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Binary options are now one of the most popular investment options chosen by traders. The simplicity of binary options trading has attracted individuals who never used to invest in the financial markets. This has been enabled through the establishment of countless binary options trading platforms over the Internet. What’s more is that when you trade binary options, no spread and no commission are involved, whereas with equities and forex trading, these factors deter many investors from participating in financial market trading. As time goes by, binary options are likely to continue to become more popular as Internet surfers and regular investors realize that the benefits of binary options trading are countless.
Once you start trading binary options, you will come to see that there are a number of key aspects involved. By knowing about these key aspects in advanced, your binary options trading experience will be that much easier. Also, by gaining this vital knowledge, you will make fewer mistakes and have the opportunity to make large sums of money in the future when you invest in binary options. Please take into account that binary options are identified by several aspects: Underlying Asset, Expiry Time, Strike Price, Call, and Put.
The underlying asset refers to the particular asset, such as indices, currency pairs, commodities, and stocks that any particular binary options trading platform offers as binary options.
The expiry time is the duration of the binary option contract. Binary option contracts typically last between 1 hour and 1 month: hourly, daily, weekly, monthly. However, some binary option trading platforms enable you to terminate the contract prior to the original expiry time. The best thing to do prior to purchasing the binary option is to examine the market behavior of the particular underlying asset. Therefore, this will increase the likelihood of you making large profits.
The strike price is the price or level that the binary option is purchased. So if you happen to purchase Google at a price of $74.37, then this is the strike price. Skillful binary option traders usually purchase binary options, depending on what they foresee their behavior to be in the specific time period. For example, if a binary option trader expects a certain asset to advance or decline in a particular time period. This will help determine which option they will select. There are 2 choices: Call option or Put option.
A binary option trader would select a Call option if they expect the asset’s price to be higher than the current level at the expiry time.
You would select a Put option if you expect the price of the binary option to be lower than the current level at the expiry time.
The profit level varies on the binary option trading platform that you trade with. Some offer 65% or 70% profit on your initial investment. Please note that this level depends on the binary option trading platform. In addition, it also depends on the asset. It is also the case that you receive a refund of money, even if your prediction is wrong or you are out of the money. For example if you invest a $100 in the EUR/USD pair, and the pair moves against your forecast, then despite this, you are still entitled to a refund. The amount of the refund depends on the binary option trading platform. However, a number of them offer 15% refund, meaning in this case $15. As a result, you can continue trading binary options.
As the demand for binary options continues to grow, so does that for binary options trading tips. It is common to find on the Internet numerous tips about investing in the stock market or even investing in general. But binary options trading tips are fairly rare on the Internet at the moment. Due to the increased number of binary option traders, the risks and benefits have increased too. A variety of binary options trading tips will be discussed below in order to provide binary options traders with enough information to trade binary options successfully.
How much to invest?
One of the most critical binary options trading tips is to not trade with more money than you can afford. This is a basic but crucial binary option trading tip. It should be noted that in some instances binary options traders fail to understand this. For example, if you only have a certain sum that you can invest, then only invest this sum. Once you understand this basic binary option trading tip, this can vastly increase your chances of making attractive sums of money from binary options.
All or Nothing
It can be a mistake to think that you need to throw all of your money into one trade. For example, let’s say that you have $5000 to invest, so you decide to throw all of this money into 1 asset. The truth is that you may be lucky, and receive high profits. However, over the medium or longer term, this strategy is likely to backfire. On the other hand, if you like taking big risks, and this strategy suits you, then if the market favors this strtegy, big profits can come your way. But one of the most important binary option trading tips as mentioned earlier is don’t invest more than you can afford.
Professional binary options traders already know many of the binary options trading tips. But to be a professional binary options trader for the long term, you will need to know most and if not all of the binary options trading tips off by heart. The most important binary options trading tip is being a disciplined binary options trader. Having luck and winning here and there isn’t good enough. You have to be consistent in order to ensure that your gains outweigh your losses. This does require patience and discipline.
Therefore, it may take a limited amount of time before you see the returns that you desire. If you succeed in having the patience required to be a professional binary options trader, then all of the other binary option trading tips are secondary. However, they are still important.
When Shall I Start?
One of the most variable binary option trading tips is when to start trading binary options. You should start trading binary options when you feel comfortable and confident. For 1 person, the binary option trading tip is to start trading a soon as possible, and learn about binary options on the way. For another individual, the best binary option trading tip for them may be to start trading only when they know all of the binary option trading tips off by heart. Well it depends! We are all different, and prefer to take different risks.
However, the best binary option trading tip is do what suits you! As long as you understand the basic concepts of binary option trading, and all of the binary option trading tips, this should be enough to get you started. For now, increase your binary option trading experience, whether with a demo platform or with real money. Good luck.
Once you start trading binary options, you will come to notice that there are a few different categories of binary options. For example forex, commodities, indices, stocks. We will discuss the first of these: forex binary options. Despite the name, the basis of trading with forex binary options is the same as the other 3 categories of binary options. For example, there is the Call, Put, high returns, reduced risk, and more.
For those of you who have traded forex before, then you may have a small idea of what forex binary options is. However, if you have no experience at all in online trading, then you will need to understand the inner-depths of forex binary options.
Forex Binary Options Explained
When we speak of forex binary options, we refer to currency pairs. For example, the EUR/GBP, EUR/USD or GBP/USD. The way forex binary options work is really quite simple. If you foresee that your option expire above above the strike price or current level at the expiry time, then you would place a Call option. On the other hand, if you foresee that your option will be below the strike price or current level at the expiry time, then you would place a Put option. With forex binary options, there is also the 2 terms: in the money, and out of the money. The first of these refers to the forex binary option going in your favor, and the second of these refers to the forex binary option going against you.
If you employ a $200 Call Option on the GBP/USD forex binary option or currency pair, at the 1.6505 level, and by the end of the hour this forex binary option is higher, then you would receive the promised return on your investment.
Forex Binary Options and Forex
Forex binary option trading and forex trading are very different indeed. However, when we play the 2 against each other, it becomes very clear that there are far more advantages with forex binary options trading than with regular forex trading. In all cases, when you trade binary options, you cannot lose more than your initial investment. What’s more, many binary option trading platforms offer you for example sums of around 15% of your original investment back, even if your forex binary option expires out of the money.
When you invest in traditional forex, you initially face many problems. From the out-start, the biggest of these problems is leverage. Leverage can go in your favor and against you. All it takes is your investment to go marginally against you at any one time, and your entire investment and trade is wiped out. However, with forex binary options, only the price at the expiry time determines how much returns you receive.
Take notice that with regular forex trading there are commission and spreads. You should be happy to know that with forex binary options; there are no commissions and no spreads at all. And it is important to note that with forex these 2 can eat into your profits.
Forex Binary Options – Summary
Despite the fact that it is a good idea to have knowledge about the financial markets prior to trading forex binary options, there is no harm in learning as you trade forex binary options. Once you begin trading forex binary options, you will gain valuable experience about binary options in general. What’s more, with the numerous resources now available to you with the click of a button, you can be an expert forex binary options trader in no time
You can trade binary options online and on a web-based binary option trading platform. Most of these trading platforms offer 40, 50, 60, or more assets to choose from. If you choose to trade binary options, you will come to realize the countless underlying assets to that are available. You can trade assets from the following categories: forex (currency pairs), indices, commodities and stocks (equities).
Forex or currency pairs are one of the categories of assets that you can trade on binary options trading platforms. Many of those that trade binary options have come to the conclusion that this is one of the most attractive types of assets to choose from. For example, the EUR/USD, GBP/USD or USD/JPY. You can trade binary options and these currency pairs at ease with some basic knowledge of the financial markets.
Common indices are the Dow Jones, Nasdaq, DAX and FTSE 100. The number of indices varies from country to country. If you want to trade binary options with great achievements, then it is best to trade with more than 1 of these. On the other hand, there are many people who trade binary options that only trade 1 of the global indices at a time. Some countries have more indices than others. When you start to trade binary options, you will realize that the countries with the most developed financial markets have the highest number of indices.
Those of you that trade binary options regularly may have realized the big 3 commodities available: Gold, Silver and Oil. However, more recently, Copper has come to be widely traded. If you want to trade binary options and be a success, then you it is recommended to trade 1 or 2 of these commodities at once maximum. Otherwise, even the most knowledgeable person that trades binary options will become confused. Additionally, the 4 commodities mentioned act very differently to each other, and trading them all simultaneously can create confusion.
Stocks or equities often make up indices. Please note that even if certain stocks are in certain indices, stocks in the same indices can act very differently from each other. Thus if you want to trade binary options with great care, it is recommended that you follow quarterly profit reports, especially from the U.S., as these can have big impacts on stock prices. Also, those of you that trade binary options regularly are advised to follow key economic indicators coming out of the financial markets. For example, negative financial news coming out of Europe and the U.S. is likely to negatively affect global stocks.
It is important to take notice that when you trade binary options, all 4 different categories of assets may strongly impact each other. For example, positive global economic data may reduce demand for safe haven currencies, such as the Yen, and decrease its value against its major counterparts. For example, the USD/JPY. Additionally, positive news could push up global stocks and indices, and so on. Therefore, when you start to trade binary options professionally, you need to gain full grasp of the financial markets.
Pay Close Attention
In order to trade binary options optimally, you should to stay on top of things. This means that you need to think out of the box. You also need to follow the new updates coming from different binary option trading platforms. Only clever traders that trade binary options regularly stay on top of things, as they attempt to take advantage of the latest binary options technology. So if you want to make money today, there is no harm in following suit.