Trading in binary options is relatively easier. A person thinking of trying a hand in the stock market needs to have a very good hold of fundamental and technical analysis. The stock market is highly sensitive to any type of announcements regarding a country’s economic and political condition and any incident taking place in the business world. Beginners need to study the stock market long before they actually start investing. Investors also have to bear a much higher risk in the case of stock market investment. It can be said that amid huge uncertainties of stock market investment, the scope of trading in the binary option market assures a sense of respite to the beginners.
People found binary options trading a very good replacement when it first started in the year 2008. For a beginner, who doesn’t have too much money to invest in the stock market, this trading platform is a favourable one. Most trading platforms allow an initial investment as low as $100.
What is a Binary Option Trading
This is a type of digital option trading which is by far the best investment alternative for the people who don’t have huge risk taking capacity or fund for large scale investment. Here investors get a good variety of assets like stocks, currencies, commodities to invest. However, in this type of trading, the trader doesn’t buy or sell any asset. He/she basically needs to make a prediction in relation to the price movement of the asset for a specific range of time period. This means the trader has to predict whether the asset will take an upward or a downward movement. The probability of profit and loss largely depends on the accuracy of prediction, of course. If the price movement of the asset matches the investor’s bet before the expiry time, the investor wins the profit. A trading option may expire in 60 seconds or by the end of the day as well.
The overall trading system is quite easy for a beginner. This is probably the main reason why most small and new investors prefer to get habitual of the binary trading market before they actually reach out for the bigger horizon. Most brokers, who offer an online binary option trading platform, also share free tutorials on their site to help a person have a good understanding of the overall process.
The trader will be given two choices – Put and Call option. If the trader thinks the price of the asset is going to get high, he/she has to choose the Call option and vice versa. If the trader’s prediction comes out to be accurate within the set expiry time, his/her account is credited with the profit amount. To be able to make a higher return on investment, traders have to play smartly and are advised to choose the assets for which enough information can be found online or offline. Although, success is not guaranteed in this type of trading as well. How the trader will perform in this type of trading depends on his judgements and skill of analysis.
The Various Asset Categories a Trader Gets to Trade in the Binary Options Market
As far as investment options are concerned, traders get a wide selection of categories to choose from. A trader can try to trade the securities belonging to any of these assets – commodities, stock indices, stocks and currencies. The major stock indices that are traded in the binary options market are NASDAQs, FTSE 100, S&P500, Switzerland’s Zurich SMI, Saudi Arabia’s TADWUL, Spain’s IBEX35, Singapore’s Strait Times, etc. Crude oil Silver and Gold are the most commonly traded commodities here. However, commodities are allowed to trade during the parent market’s official trading hours only.
How a Beginner Can Profit From The Trading in Binary Options
Nothing comes so easy in life. It needs hard work and commitment to learning to be a winner in binary trading. A trader has to observe the binary trading market movement patiently and should study the asset class as well. It’s best not to take too long positions initially. If a trader enters the market with zero knowledge or preparation, nobody can help him/her. Investors have to be very cautious about selecting the assets. The highly volatile assets tend to change their value too fast. As these types of asset movements are too difficult to predict, traders have to be very smart in selecting the time of expiry. However, with patience and time, a trader will get a hold of all these things slowly.
Binary Option Trading: A Quick Recap of Essential Aspects
A binary option trading needs a trader to make a prediction regarding asset movement.
Based on prediction, the trader has to choose a CALL or PUT option. If the trader thinks the asset price will rise, he clicks the CALL option. If he/she thinks otherwise, the PUT option becomes the immediate choice.
On this trading platform, the trader also has to set the asset’s target price, also known as option’s strike price.
When the price of the asset finishes higher than the strike price within the expiry time, it’s called “expire in the money”, for which the trader earns profit. Alternatively, if the asset price finishes lower than the strike price, it’s called “ expire out of the money, which is definitely a loss for the trader.
Different Brokers have different offers on binary option trading. Some offer a discount of up to 15 percent as well.
Binary Options Trading benefits
The biggest benefit is the convenience of use, of course. A trader just needs a computer, an internet connection and an account with a binary option broker, that’s all.
The second benefit is the scope of small investments. A trader can simply start with a $100 investment initially.
A trader will also get many binary options broker choices to start with.
To Begin the process, a trader just needs to deposit a very small amount of money in the broker’s trading a/c and that will be all.
Binary option trading also doesn’t need a trader forecast the rate of change in the asset price.
The trading option is relatively less risky and also promises high profitability. Here a trader can maximize his profit by getting an accurate information on the target asset. This means a well informed trader will do better than an ill informed trader in the binary options market.