Binary Options Unveiled

by ETF Base on July 5, 2013

For those interested in getting involved with day trading, the options out there can seem endless and overwhelming. Many first-time financial betters find success with binary options, an option where the outcome is all or nothing. In others words, the only possible outcomes are a) you earn money or b) you lose your defined stake.
How Binary Options Work
A “binary option” is the term used for an option where the trader can select a “long” position or a “short” position on the future value of a selected asset (which includes stocks, commodities, etc.). The trader simply needs to forecast whether the future price of their chosen asset will be higher or lower in a specific frame of time. Generally, binary options have a small time frame, with the majority of them ranging from one minute to thirty minutes, though they can go up to a week (whereas standard investments are normally held for months, or even years, before a return is seen). If their prediction is correct, the trader will be paid the accorded value; if they are incorrect, the trader loses the stake. Binary options are sometimes referred to as “digital options”.
Advantages of Binary Options
There are many advantages to binary options. Many first-time traders are drawn to their accessibility and their small time frames. The fact that you can trade using minimal amounts of money is also quite appealing, as it means that you can invest as little or as much as you can afford. With binary options trading, you can also calculate that amount that you are at risk of losing, therefore preparing you for a potential loss, and preventing you from losing more that you are able to afford.
The simplicity of binary options is another major selling point; brokers traditionally make binary options as simply as possible so that the process can move quickly, meaning that there are only a few steps to take in order to get started. Furthermore, there is a wide range of internationally traded assets available in binary options, and brokers can offer different types of commodities, stocks, indices, and currencies, giving traders an extensive selection.
Tips for Succeeding in Binary Options Trading
No matter what form of financial betting you engage in, be sure to do your research. Understand the current trends, and stay up to date with the financial news. Online binary option trading is very popular, and there are many websites on the market, so choose wisely.
Beginners should select a platform that provides a free membership and that is web-based; there should be no requirement to download any software. In addition, the chosen platform should have a clear policy on security, as theft identity is an issue in online binary options trading. Pick a trading platform that offers substantial returns. The industry average on investment returns is 61% to 75%. It is important to pick the right time frame in binary options trading; this can be a struggle, since your goal is to make the most money possible while tying up your money for the least amount of time necessary. Shorter times (such as 60 seconds) mean that your money is tied up for only one minute, allowing you to make multiple trades in a day, but it is also more exposed to market fluctuations. Longer time frames require more fundamental analysis, and a close assessment of the long term forecast.

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