Binary options also known as digital options are the most recent trading options for the traders' worldwide. The most appealing characteristics of binary options trading are low investments & high return rates. Unlike conventional vanilla trading options, binary options are versatile, exclusive of any complexities. This trade is based upon simple procedures, and is considered as the most convenient and fastest growing peripheral of trading market. Binary trading options only needs to anticipate the direction of a particular asset's price where as other kind of trading options also require speculation on the magnitude of movement of a specific asset price. Moreover, binary trading options are considered as one hour options while vanilla options expires once in a month only. In addition, binary options pay a fixed return.
How It Works?
Binary trading is pertinent for different types of leading assets, such as Forex trading, global stocks/indices, commodities and events.
Forex Trading
It comprises of trade with currencies. In a particular Forex trade interrelation between two currencies are used. By choosing binary options in Forex trading, settlement is made either at 0 or 100 value, as determined by the exchange market. For example, if u chose a pair of USD/JPY and you anticipate that dollar will depreciate as compared to the spot price and it will decrease against YEN. So, you decided to sell the share. Now, the profit or loss can be calculated depending on number of contracts, bid price & the contract price. Different exchange markets are opened worldwide for Forex trading; NADEX is one popular & reliable out of those available.
Global Stock/ Indices Trading
It is about trading numerous shares in a specific market. For example, Binary trade can be used for different stock indices available in US & rest of the world. Wall Street, USTech100, Germany30 etc are leading stocks in the world. Binary options for this asset can be used exactly the same way like Forex Trading. It requires speculation on whether an index will rise or fall the spot price. Hence, trade can be done under simple circumstances, and profit & loss can be achieved accordingly.
Commodities
For a binary business with commodities such as metals, energies, agricultural, less collateral is required for never-ending trade opportunities. However, it also works on same principles like the other leading assets. The aforementioned commodities in binary trading are considered as a safe measure to hedge the shares portfolio and prevent the economic & political crises.
Events
Binary options trading are also applicable to events such as weather announcements, jobless claims, non firm payroll announcements etc. Binary Options is an excellent tool for weather announcements because many leading companies are adversely affected by unpredictable weather conditions and natural disasters like hurricanes, sand storms etc. Therefore, binary trader can serve these companies and earn high payouts by making extensive research in the field and biding on the environmental conditions.
Smart Tactics for Safe And Successful Binary Trade
The most efficient & profitable strategy for binary trading is Market Pull Strategy. This strategy is based on Knock-On-Effect. It uses the concept of interrelation of one option with another option. The most universal application of this strategy is dependency of a particular currency on a specific commodity. For example, USD relies on Gold, Silver & Oil. Indian Currency rupees depend on Gold. New Zealand currency is also commodity linked currency and list goes on.
Nevertheless, there are various interrelationships in the financial markets that are worthy to consider. So, for a victory in binary trade, you first need to educate yourself with the different price movements of the options available.
Another beneficial strategy to implement in binary trading is Reverse Strategy. If your Forex trades does not give you success, then take a position opposite to that for binary trade. It involves picking up a cheaper binary option. In this way losses are minimized & risk is controlled. Moreover, use of financial indicators can be productive to you before you begin speculation on any asset, to ensure valuable profit in your investment.
IntelliTraders is a free Binary options trading community to help traders to learn and start trading with best brokers.