Learn the Basics
Some experts say that Binary Options Trading is the best way of increasing your portfolio without the inherent risks. With Binary Options, even traders who have very little knowledge of how the various financial markets work can trade stocks, commodities and FOREX.
Binary Options are regarded as the least complicated method of trading. There are really only two outcomes: receiving a payout, or not receiving a payout. As a Binary Options Trader, your only concern is whether the asset will increase in price, or decrease in price.
If you are counting on the price to increase, then you put in a Call Option; alternatively, if you expect prices to decrease, then you enter a Put Option. If you’re correct, and prices move in the direction that you’ve predicted, you get a payout. This is also known as ‘in-the-money.’ However, if prices moved in the opposite direction, you will lose the premium that you’ve paid for your option.
This is known as ‘out-of-the-money.’
There are two main classifications when it comes to Binary Options Trading: “Cash or Nothing” and “Asset or Nothing.” In the former scenario, contracts that have expired with an ‘in-the-money’ amount will net a trader anywhere from 60% – 81%, depending on the broker you’ve chosen.
In the “Asset or nothing” scenario, the total payout will depend on the security value. Binary Options Contracts can include assets such as FOREX, stocks, indices and commodities. The risk incurred in Binary Options Trading is limited to the amount of money that a trader paid for the purchase of the contract.
However, this doesn’t mean that traders should put any of their hard earned money at risk. Binary Options Trading is a good first step, to get your ‘feet wet’ in the world of trading. It is still very important to learn everything you can about the financial markets, how to decipher technical charts and how to make decisions based on information and data that you analyze. A basic trader will take one day at a time and enter trades based on current knowledge and skill level. They will also never stop learning or developing their own trading strategies.