Binary options for dummies

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Binary Options Trading Guide

Welcome To Our New Traders “Dummies Guide” On The Basics Of Binary Options
Hi and welcome to the BinaryTrading.org’s New Binary Option Traders Guide. This page covers the basic but important facts about binary options you need to know before you begin trading. It is a good idea to bookmark this page as you will likely reference it in the future. Here is an outline of the things you will learn.

  • What is a Binary Option?
  • Types of Binary Option Trades Available
  • Basic Strategies
  • Tools You May Want
  • List of “Things To Know”
  • Example Trades
  • Getting Started

What Are Binary Options Themselves

Binary options are very simple option contract with a fixed risk and fixed reward. These options are called binary options because there is a “one or the other choice” and a one or the other payout after the option expires. One or the other choices include up or down, or touch and no/touch. In computer code binary means 1 or 0, or one or the other.
[scg_html_rbox_marketsworld]
The way a binary option works is from the traders perspective (yours) is that you choose whether or not a certain underlying asset (a stock, commodity, currency etc) is going to go up or down in a certain amount of time. You essentially bet money on this prediction. You are shown how much money up front you will earn if your prediction is correct. If your prediction is wrong, you lose your bet and the money risked. If you predict correctly you get your money risked back PLUS a return. These returns usually are between 70-85%.

A brief example would be that you predict the price of gold to rise from it’s current price of “$1612.75” one hour from now. The winning trade offers a return of 80%. You place a $100 trade on this idea.

One hour from now the option contract expires (closes) and the contract is graded as a “win” or a “loss”, or “in the money” / “out of the money”. Gold goes up to $1613, you predicted correctly. You get your $100 back and a return of 80% – or $80 for a total of $180. Even though gold only went up a tiny amount, you still earn the 80% return. Magnitude of price movement is not a factor in the amount of your return.

Key Ingredients Of A Binary Option Trade
All of the different binary option contracts have these three key ingredients that traders need to take note of. They are the expiry time, the strike price, and the payout offers.

  • Expiry Time
  • Strike Price
  • Payout Offer

The expiry time is simply the length of time from the moment you ‘buy’ the option contract until it closes. This can be as fast as 60 seconds or as long as a month. The majority of traders are trading the short term binary options, anywhere from 60 seconds to 30 minutes.

The strike price is the price that you were able to enter the trade at and this is the price that determines whether or not your trade is a winner or a loser. In the brief example above, the strike price is $1612.75. This is the price that gold needed to close at above in order to win this trade.

The payout offer is the return that binary option broker is offering to you. In the gold trade example above, the payout offer was 80% for a win and 0% for a loss. Some trades do have a return percentage for losses, typically up to 10% although this is broker and trade dependent. The payout offer is known up front before risking any money.

Types Of Binary Options Available
There are multiple types of binary options available to trade. The simplest and by far most common trade is the Up/Down trade. You can learn about the different types of binary options available to trade here.

Beginner Strategies
We have compiled a list of basic binary option strategies that will help you get started making higher probability trades.

Tools You May Want To Use

I am going to beef up this section as new tools arrive on the market to help you make your trades. For now you can review some of the binary trading signal services on this page.

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Key Things To Know About Binary Trading

So now you understand the basics of trading binary options. Some key things you should remember before you dive in are these:

  • Your risk is limited to your trade amount
  • The minimum trade is as little as $10
  • You do pay for losing trades – you lose your trade amount (or the majority of it)
  • There is plenty of risk involved. Never ever invest more with a broker than you can afford to lose. It’s risky!
  • You never take any ownership of the underlying asset – you only “bet” on the direction of it’s price movement
  • To make money over the long term you have to win the majority of your trades
  • Up / Down are only 1 type of binary option, there are many different kinds of trades available to make with binaries
  • Trading binary options is designed to be easy to do.

Your risk is limited to the amount you place on the trade. Your payoff is clearly stated before making the trade. If you win a binary options trade you win a fixed amount of cash. Since there are only two possibilities, that’s the origin of the name “binary options.”

Screenshot of a Binary Trading Interface – Choose Up Or Down, How Much To Risk and “Apply”.

  • Up or Down aka ‘Call or Put’

Do you think the price of “x” is going up or down? In the screenshot above from Banc De Binary, we are looking at the current price of gold. Gold is “x”. The green line is the price movement of the gold over the course of time. The red section on the right hand side is the last moment you can trade this binary option. After that point, the option is closed for trading. It has not expired quite yet if you traded previously, however your window of trading is over.

If you think the price of “Gold” is going up you place a “call”.

If you think the price of “Gold” is going down, you place a “put”.

Those are your only two options. Hence “Binary”. If you pick the right choice of the two you win the trade. If you pick wrong you lose the trade. There are two choices only. ‘Up or Down’. And two outcomes, ‘Win or Lose’.

That is the very basics of binary trading for dummies. It is that simple, and it is designed to be that easy. Your return is clearly stated before hitting the ‘apply’ button. You will earn 72% on your investment if you finish the trade ‘in the money’.

“X” can be any number of underlying assets. It can be a certain stock or it can be the price of gold or oil. It can be a currency pair or it can be the price of facebooks stock. You get to choose what underlying asset you want to trade.

There is one more important factor left out of the simple illustration above and that is the expiration time or maturity date of the option. This is the point in time when the trade expires. This is the point when the actual price of the underlying asset is determined and you find out if you finish the trade ‘in the money’ with a win, or ‘out of the money’ with a loss.

If you chose ‘up, or call’ and at the the price expired higher, you win. The expiration times vary from as fast as 60 seconds to as long as hours, days and even weeks.

Binary Trading For Dummies

There is no doubt that trading in binary options offers the potential to generate a considerable return on your investment ( even for dummies ). However, it also presents an opportunity for the uninformed and inexperienced to simply lose money. Although the basic premise, of predicting the movement of the price of an asset, is simple; there are a variety of factors which must be taken into account if you wish to trade successfully and generate a good rate of return.

How Binary Options Trading Has Started – Strictly For Dummies

The first binary brokers started offering their services to the public nearly ten years ago. The initial response may have been skepticism but binary trading has no become an acknowledged financial instrument in many countries and is regulated extensively. To make a profit you must understand the market, and preferably the asset, in which you are trading.

How to Trade In Binary Options

To make the most of this income generating possibility there are a few steps which must be followed;

Binary Options Broker Choice

Decide upon which binary options broker you intend to use. There are hundreds of binary brokers to choose from, some are registered and regulated; whilst others are not. You should choose one which has either been recommended to you or has a good reputation. You will need to review their terms and conditions particularly regarding minimum deposits and trade amounts. There will also be conditions attached to any bonuses you receive.

Binary Options Account Registration

Register for an account with your chosen broker; this is usually a simple form on the website and a copy of your ID, (this will need to be sent before you can withdraw your funds). Once registered you will need to fund your account with at least the minimum deposit amount.

It is important to note that every broker offers a different range of features and you can sign up to more than one broker. As a new trader you should look for a broker who offers a demo account, low deposit and a good average rate of return. Having created your account you will be eager to start trading. However, you should take the opportunity to study the educational material and learn as much as possible regarding binary trading.

Then use the binary options demo account which will allow you to familiarize yourself with the layout of your site before you trade for real. The practice account also offers an excellent opportunity for you to test some of the strategies you should have been learning about. Not every approach will work for you; it is essential to choose a strategy and trading style that you are comfortable with. You will then be able to maximize your chance of placing successful trades.

Binary Options Trading Process For Dummies

You can then choose your asset and the strategy you wish to employ. Once you have selected the right trade for your prediction you can click on the ‘select trade’ or ‘buy’ option and confirm the amount you wish to invest. It will then be time to wait! Trades can be for as little as thirty seconds or as long as a year; although most traders choose to operate between one and five minutes.

It is important to note that every time your prediction is wrong and you lose your investment, the broker gains your funds. In some ways this is like gambling as you are playing against the house. However, you are not simply relying on luck! Even when you place a successful trade your broker is likely to make some funds from you via charges! The average rate of return is in the mid seventies; this means that you need to place successful trades between fifty five and sixty percent of the time; just to cover your operating costs. This is why it is essential to research and understand the assets and the market.

Binary Options Signlas Importance

Most experienced traders will use some kind of binary options signals. This can be as simple as a chart showing the rise and fall of an asset over short and long time periods. From this chart you will be able to see a trend and can trade according to that trend. More complex signals involve creating boundaries and even moving average prices. This is often too complicated to deal with when first starting trading. A viable alternative is to subscribe to one of the signaling services. They will inform you which asset to trade on and which direction to trade in. These signal providers offer a very good success rate and are essential assistance for those with limited knowledge or time.

Most signal providers will offer their services for a price; this can be as much as $100 per month. However, they should assist you in increasing your returns and allow you to control the risks your expose your funds to. The more risk you are prepared to accept the more signals you will receive each day!

An extension of this, which some brokers allow, is to use an automated trading software. This acts like a robot which reacts to the signals and places the trades for you; meaning that you don’t need to do anything!

With the right approach this can be a viable way to generate an income; whether new to the market or experienced.

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Please note that all trading involves risk. Only risk capital you’re prepared to lose. Past performance does not guarantee future results. This post is for educational purposes and should not be considered as investment advice.

How to Trade Binary Options Successfully – Free Binary Book Download

Binary options trading provide you with an opportunity to trade stocks, currency and commodity options using a simple platform interface using one mouse click. In contrast to standard investing, binary option (BO) trading offers you an extremely clear picture of pre-determined ROI. This is an excellent chance to command the gains and control the potential risks. It is not the market but instead you who really makes a decision on just how much you may risk and what is your preferred gain results.

The purpose of this binary options eBook is to show you how to make money trading BO. BO are a popular investment instrument for trading stocks, commodities and currencies. Trading Binaries is very simple and straightforward, all you need to do is decide which of the two directions the asset will move, up or down. В And binaries has quite a high profit potential.

BO allow even beginners the opportunity to succeed with financial trading. Actually people that have minimum financial track record can easily make money by learning how to trade options online.

This trading binary options for dummies PDF features the in and outs of BO as well as strategies needed to achieve success in trading binaries.
Here are some of the topics you’ll discover while reading the book:

  • The single most critical factor to binary options strategy success – ignore it at your own perils.
  • How to prevent falling prey to a dishonest broker.
  • Simple, easy to copy ideas that will enhance your chances of winning trades. binary options strategy.
  • How to spot a scam.
  • What you need to succeed in BO.
  • Advantages and disadvantages of trading BO.
  • Effective risk management strategies to help you minimize your risk and conserve your capital.
  • Key factors to successful financial Binaries Option trading.
  • How to develop BO investment strategies and entry points signals that work.
  • A list of easy-to-follow tips to help you improve your trading successes.
  • How much money you need to start trading.
  • All this and much much more.

You can download the binary book now for free here (PDF version):
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Trading binary options for beginners video

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Binary Book Excerpt: What is Binary Options Strategy

The purpose of this ‘how to trade binary options successfully’ book is to show you how to make money trading Binary Options. In the first several chapters we will deal with the in and outs of BO while later on we will go into the strategies needed to achieve success in trading binaries.

So what are Binary Options (also referred to as ‘digital options’, ‘fixed return options’ andВ ‘all-or-nothing options’)?
A binary option is In fact a prediction of which direction the price of the underlying asset (a stock, commodity, index or currency) will move by a specified expiration time. With Binary Options, an investor doesn’t purchase the asset – he is merely predicting the direction that the underlying asset moves. There are actually just two possible outcomes. A fixed gain if the option expires “in the money”, or a fixed loss if the option expires “out of the money.”В The price of the asset is not important. The only thing that is matter is whether the prediction is correct or incorrect.
A binary options trade usably involved three steps:

First, you choose a trade expiration time, this is the time you want the trade to end. It could be any time period between a minute and a week – usably it is within the day.

Second, you choose Call or Put. If you think the price will end up above the current price: you click the buy/call button. If you think the price will end up below the current price: click the sell/put button.
Now that the trade is placed, you simply wait for the outcome. If the trade expires ‘in the money’, you make a profit. If it expires ‘out of the money’ , you’ll lose.

Now you can see where the “binary” comes from, it stresses the fact that there are two possible outcomes to a binary option, both of which are set and understood by the investor prior to placing a trade.
Now here is an example:

You purchase a Google binary option for $25, with the opinion that within 2 hours Google’s shares will be higher than they currently stand. If you are correct you get a previously set percentage return on your investment (e.g. 82%), should the shares go lower you lose your investment (some brokers will give you back a small amount as a “refund”).
A number of factors distinguish binary options from regular stock options.

Typically the short-run expiration time suggests traders could make an immediate profit on the binary options and therefore are way more versatile in their option investments.

In regular stock options, a trader will pay per contract. Therefore the investor may profit or lose a sum based on the quantity of points difference between the expiration level and the strike price. In contrast to binary options in which the two outcomes are actually set from the beginning.

An investor in a binary option needs to hold onto his option until the expiry date. He must consequently take more care when ever buying his options as he is unable to sell them after they are purchased.

Binary options are categorized as exotic options, however, inside financial markets they sometimes are termed as digital options. While digital options are quite simple to understand and easily traded, the mathematics behind the pricing is complex. It is because of this that digital options are referred to as exotic options.

For years Binary Options were traded by large institutions and their clients in the over the counter market (OTC). In 2008, the Securities and Exchange Commission in the US approved the listing of binary options with continuous quotations and now binary options are also available to individual investors.

Most binary options strategy tracings nowadays are performed online thru private brokers that use sophisticated trading platforms

    • What Are Binary Options
    • Developing Your Money Management Strategy
    • Developing Successful Investment Strategies
    • How to Spot Brokers that Scam
    • How to Make Money Trading Binaries
    • How Much Money You Need to Start Investing
    • Advantages and Disadvantages of Binaries
    • US Binary Options Brokers
    • Tip for Success
    • Developing a System
    • How to Trade Binaries
    • Free E-book Download Page
    • How to Develop Successful Signals
    • How to Find a Forum
    • Demo Account to Practice Investing
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