What are Binary Options?
Binary Options are a way for traders to make money on the volatility of share prices. The movement in the values of virtually any asset, (including stocks, indices, currencies and commodities), can be used to trade Binary Options. By doing this, you do not purchase the asset, but rather open an options contract (an agreement between trader and broker).
How do I do this?
To place a Binary Option you will need to:
- Decide on a suitable asset to trade and make your contract choice based on technical or fundamental analysis (news, charts, economical events, etc) or even social trading sentiment.
- Select an expiry time for your contract. Some brokers offer expiries from as short as 30 seconds, anywhere up to 1 month.
- Choose a contract option to signify a prediction in the value of the asset either going up within the designated expiry time (Call Option) or going down (Put Option).
- Decide how much you want to invest in your prediction. Flexibility varies from broker to broker, but may start from as little as $1 and allow as much as $50,000 on a single trade.
- Click ‘Buy’
How much money can I make?
How much money you make depends entirely on how much you choose to invest in your trade, the payout percentage and of course, if you’ve made a winning contract choice.
During the process of selecting a contract you will be presented with a payout percentage to indicate the profit that a winning trade could generate. This percentage is variable according to the expiry, asset type and any additional trading features applicable.
So, for example, if you choose to invest $100 on a contract that states an 80% payout. Upon a successful return, you will receive your initial $100 back, plus $80 profit (80% of the invested amount) on top. If you land out of the money, you will be $100 out of pocket.
How can I improve my chances for success?
With Binary Options trading, success is measured by good choices. There are a few elements that are integral to the process; including education in trading terms, technical and fundamental analysis, strategies and risk management. A reliable broker is at the heart of this.
Check out our list of approved brokers to begin your journey toward success.