Binary Options Basics

Binary Options Explained

Binary options were long considered as an exotic form of trading, more akin to gambling than actual trading. This perception has begun to change, however. Binary options are quickly becoming an acceptable method of trading. Besides being fairly quick-paced, binary options also are a good deal more fun than traditional trading. Thanks to their quick payouts and simple structure, almost anyone can begin trading binary options and start seeing profits pile up quickly.

Binary Options Basics

The theory behind binary options is quite simple. There are no commissions to worry about, no spreads, or any other trickery that helps the broker make money. Instead, you are given a stated percentage that will be returned to you if your prediction is correct. These generally range between 60 and 80 percent. All you need to do is select an underlying asset and the direction that you think its price will move. Then you select an amount to risk and a timeframe. It’s that simple. Once you are done, you simply wait the allotted timeframe and see if you were correct in your prediction.

Trading binary options is different from other forms of trading because you never take ownership or responsibility for the underlying asset. You are merely making a prediction on where you think the price of the underlying asset will move. Call options are meant for a price that you think will increase. Put options are made for traders who think the price will drop. The same terminology is used for the traditional type of option where you are actually given the opportunity to buy and sell the actual asset. Again, with binary options, the process does not entail any type of ownership on the trader’s behalf.

Binary options might seem like a gamble at first, but they are actually quite beatable. By tracking price changes in real time, you are giving yourself a clear advantage over the folks that simply go to the binary option broker’s website such as Banc De Binary or TradeRush and trade from there. Whether you are trading stocks, indices, currencies, or commodities, you want to find a real time charting package that you can use and trust. By finding and identifying these trends in price, you can do a better job of predicting exactly where you think the price will go.

While this is not foolproof by any means, you can give yourself a profitable experience by mastering the usage of real time price charts. Any advantage you can give yourself will add up over time.

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