The fundamental premise of trading in the binary marketplace involves predicting what the price of a specific asset will do; it can only move in one of two directions within a given time frame ( read more about put and call options ). Your chosen item does not need to hit a certain price; merely to increase or decrease in line with your predicted. This will ensure you can trade successfully and you receive the advertised rate of return.
Before you can place a trade you must establish the funds you are willing to risk and what rate of return is being offered. Every trade will also have an expiry time; these can range from as little as one minute to as long as several hours. Once you have established these basics and chosen your asset; whether stocks, indices, commodities or currencies; you can get started.
Assuming you have read the market correctly then the price of the asset is moving in the direction indicated you will have your money returned and an agreed additional amount will be given to you. This is how you make money trading in binary options and should be the first type of trade for you to master. Of course, if your prediction is not true then you will lose the funds you have invested on that trade.
There are only two possible options every time you engage in this type of trading. Either you will be right and receive the agreed rate of return, or you will not and your funds will be lost.
Types of Trade
The simplest and most popular type of binary trading is to predict the price direction of an asset. However, this is not the only option. You can select from the following types:
- One touch – you will need to specify a price and your asset must touch that price during the timeframe of the trade.
- No touch – this is the opposite of one touch. You simply state a price that the asset will not be able to reach during the trade. If you are correct you gain the agreed rate of return.
- The range – This type of trade involves creating a bottom and top price line. Your chosen asset must stay within these boundaries for you to win the trade.
Trading in binary options will enable you to become active in the stock market without needing to sign up to the main stock market and find a large amount of capital. Binary trading is easy to understand and accessible to everyone. It is an excellent place for new investors to gain experience without risking large amounts of capital.