Binary Options 101: Everything You Need To Know
Binary options trading is an exciting style of trading which has sparked much interest in the business world, due it part to its huge money making potential. As with stocks, if you can predict whether an asset will either rise or fall in price in a set amount of time you can make a fortune. Best of all, it’s simple, and anyone can do it. You don’t need to be an accountant or a financial genius in any way. But before jumping in, it’s important to understand key facts and how it all works to reduce the risk of losing your money. If you’re interested in binary options, here’s what you need to know.
What Are Binary Options
This is a financial ‘option’ whereby the payoff is either a fixed amount of money or nothing at all. There are two main kinds of binary options; these are the cash-or-nothing binary option and the asset-or-nothing binary option. They are also known as ‘all or nothing’ options for obvious reasons. It’s one of the reasons why this kind of trading is so exciting, because it’s a clear cut win/lose and you have the chance to grow your money exponentially or lose it.
What Can Be Traded as Binary Options?
Indices, the foreign exchange market (these are all major currencies) commodities such as precious metals, oil, and food crops are all options. Stocks are another asset which can be traded as a binary option. Over forty-five of the world’s biggest companies are available from Google to Coca-Cola.
To begin trading in the binary options market, you have to have access to an excellent trading platform. You will need to register yourself with a binary options broker and open an account. Selecting a binary options broker is a critical step and should be done carefully. Gemini2 is one such software, although there are many out there so do your research. Your best bet is to start with a demo account; this will give you the chance to practice trading in a sandbox environment without using real money. It will help you to understand the process of trading in this kind of market, and give you much needed practical experience. It also allows you to formulate a strategy and analyze certain stocks, enabling you to know how to make a reliable prediction. Downloading binary trading apps can also be useful as then you have access to everything you need, wherever you are.
Winning and Losing
As a binary options trader, you should remain aware that you are essentially playing against the house- the house being your broker. Your broker makes money whenever you lose your invested amount, and as with any form of gambling the house (or in this case broker) will always come out on top overall. That’s not to say you can’t do very well, but is something to be aware of. Always trade sensibly.
Have you heard much about binary options? Is this a form of trading that you would look into?