What Exactly Are Binary Options?


stock-exchange-1426330_960_720In its early inception in 2008, binary options trading has since attracted tens of thousands of investors around the world. Unlike others, binary options are not that difficult to trade. In fact, you would not need a license or a special degree to trade. Even if you have zero knowledge and experience of the financial market. Anyone can be part of binary options and trade. If you reading this wondering “What exactly are binary options,” then this article is for you. If you are a novice to this type of trading and wish to be part of something that many people have already earned much money, we will provide you with all the necessary information so you can trade with ease, knowledge, and confidence. More info at binary-options.trade.

So, to answer your question, what exactly are Binary Options?

It is important that, in any industry that you wish to be part of, you have a good understanding what it is about. The same goes with binary options. Binary options are an easy means of trading the price fluctuations of the different assets which are traded on the global market. The trade will take place between you – the investor – and a binary options broker, which we will discuss more about later.

Binary options is all about your ability and decision to forecast whether the price or value of your chosen asset will go up in a specified time. This is the Call option. When you think or predict that the price of your selected asset will go down in a specified time, then this is the Put option. That is why it is called binary options. You only have to choose between two financial decisions.

Your broker, on the other hand, will be offering you a fixed return on your decision. This way you are already aware how much return you can expect and get regardless if your prediction is correct. On the flip side, this will let you know how much you are risking if your prediction is incorrect.

Underlying Assets: What are these?

To put it plain and simple, underlying assets are those that get traded on world global markets. Some examples of underlying assets are stocks, commodities, forex, equities, and indices. Each of these assets represent different markets which are called market segments.

When you say “underlying asset,” the word underlying is then applied to the specific financial method used when you trade in derivatives, such is the case in binary options which are solely based on the price of the chosen underlying asset – not on the asset itself.

Since you can consider yourself a beginner in the binary options, we suggest that you familiarize yourself with a few assets. Do your research. Google is your best friend. Reading materials on the internet gives you a lot of information to be more knowledgeable in your chosen industry. Once you have successfully mastered your chosen assets, you can now go and learn more about the other types of assets.

How do I start as a binary options trader?

Now that you have enough knowledge about your selected asset, you are tasked to open a demo account with broker. We recommend that you also do your research about this. Google will give you thousands of binary options broker but half the battle is won if your broker is someone who understands how you wish to do business. Signing up with a specific broker is normally free but they would require you to deposit a minimal amount which you can then use for trading. These brokers usually offer convenient ways for you to deposit and withdraw money. Binary options trading websites are filled with useful information that you can read before you trade. Make sure to make the most out of these materials so you can trade with confidence. Some even offer demo accounts which means you can practice your trading skills without costing you money because these brokers believe that by providing this venue to practice, you can learn more about the industry. Once you feel that you already know how the whole thing works, you can opt to get a real account.

What are binary options robots?

The Internet has also improved how people trade. Now brokers offer automated trading programs thru the use of binary options robots. These robots are software that are designed to trade in your behalf whenever a trading opportunity is present based on the parameters that you set. This means your robot is trading for you even when you are out of the house and is busy attending to an important matter.

This software is available for you to download in your laptop. Some brokers have it up on their site so you do not use your bandwidth for downloading a software.

How do I become a better trader?

Binary options are all about your ability of prediction. A good trader knows when to stop and call it quits. You must learn from your previous mistakes. We have prepared some tips on how you can become a better trader.

  • Keep track of your trades – To be good at what you do, you must have a record of how well or how poorly you did in the past. Keeping a journal will help you identify your areas of improvement and let you improve that. Your journal should include the date, the price, what happened, and important notes about your trade that day.
  • Plan Ahead – A good trader knows that a plan will make everything smooth-sailing. Planning ahead means knowing what to do when the unexpected happens. Plan your trades and be prepared to follow it.
  • Be updated – There are many factors that affect the rise and fall of your selected asset and it is in your best interest to be updated about them. Read the finance page of your newspaper. Set up a Twitter account and know the latest market trends. This way you will make an informed decision in your next trade.

Join our newsletter


Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit
About the author

Join our newsletter

Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit

ModestMoney.com Top Finance Blogs