Ready to Strike: How to Trade Binary Options

Binary options have become a favorite investment vehicle for large and small investors alike. Before 2008, they were only available to the big financial powerhouses. The SEC changed the rules around trading binary options and opened the doors to everyone.

Binary options went through a few shifts early on. They exploded because trading platforms got better and the types of options available became much broader.

It’s a great way to get started in investing. Do you want to know how to trade binary options and enhance your financial portfolio? Keep reading to find out.

What Are Binary Options?

If you want to know how to trade binary options and make money, you have to understand what they are and how they work.

Binary options appeal to beginner traders because you’re answering a simple question. Will a stock trade higher or lower at a certain date and time?

For example, you can look at a Forex pair like the British Pound and the US Dollar. You can say that the pair will be $1.30 at 4:25 pm in two weeks.

Your option is always between $0 and $100. This is like your bet. You have a few potential outcomes with binary trading.

It’s a simple question that starts with will this asset be at a certain price at a certain date or time. So, in order to trade a binary option, you need to choose your asset and know whether or not that asset will be at that target.

When the option expires, you’re either in or out of the money. In the money means that you were right, and you’ll get paid. Out of the money means that you were wrong, and you get nothing. You lose money on that transaction.

How to Trade Binary Options

It seems simple on the surface, but there’s a lot more happening that you need to understand. These are the basic things you need to have in place to pick

Pick Your Assets

The great thing about binary options is that you have a wide range of assets to choose from. You can trade some Forex pairs like the British Pound or Japanese Yen to the US dollar. Most beginners decide to start here because the currency market is easier to understand.

You can also trade commodities like gold, oil, silver, corn, natural gas, soybeans, wheat, or coffee. The advantage of trading commodities to start with is that they tend to be low risk. Commodities typically don’t see too much volatility.

The disadvantage is that the payout is a bit lower than other assets.

The third asset you can trade are stocks. These can be the most volatile assets with the highest amount of risk. They can also provide the highest payout.

Select Your Timeframe

You’ll pick the timeframe of the option after you pick your asset to trade. You can set this to an hour, at the end of the day or a week.

Another way to position your option is to play it against upcoming events. For example, if the jobs report is coming out in the next week you can play an option based on the outcome of the report. If you think that job growth slowed, you can assume that the US dollar will take a hit.

Likewise, with all of this Brexit news coming out of the United Kingdom, you can bet that it will continue to drag down the British Pound until it’s resolved.

Binary Options Trading Platform

You can’t complete a binary options trade without using a trading platform. This is where you have to be very careful. There a lot of platforms that offer binary options trading. That may seem like a good thing, but there are a number of fraudulent sites out there.

It’s such a problem that the FBI is warning investors about these sites. They will steal your ID to sell it, not pay you for winning trades, or install malware on your computer.

How to Choose a Binary Option Platform

You need a trading platform, but you also need to choose the right one. Here’s what you need to know when you’re picking a binary options trading platform.

Experience

You want to start by doing your research. You’ll want to look for sites that have been around for a while. Sites with a long history and experience mean that they’re likely to serve investors well.

Trading Markets

Binary options platforms don’t trade the same assets. They may not even trade in the same markets. They may be held to different rules and regulations, especially if they are outside the US. If you have your heart set on trading certain commodities or markets that you know well, make sure that the trading platform allows you to trade there.

Deposits and Fees

This is incredibly important to understand. Online trading isn’t free. You need to know how much each trade is going to cost you.

You also want to compare the amounts required for a deposit. For example, the IQ Option deposit is only $10 for a minimum deposit. Other places may require $50 or $100 to get started.

Trading Binary Options

Binary options can be a great way to get started as a day trader. They are very attractive because they’re very simple. You’re basically answering a yes or no question.

As simple as they seem, there’s a lot that you need to know about binary options. Otherwise, you might as well place a sports bet. You need to know the assets that you’re trading, whether you’re trading commodities or Forex pairs.

What to know how to trade binary options? Understand the market conditions like economic reports that can impact the outcome of the option. Finally, you better have a reliable trading platform that allows you to trade without gouging you in fees.

Do you want to know more about building wealth? Come back to blog often so you can learn how you can build your financial portfolio.

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