Binary Options Trading - Your Day Trading/ Swing Trading Alternative Options Trading
Binary options trading is getting popular over the past few years in Europe. If you want to make a quick profit without worrying about commission, spreads and huge initial outlay or risk of losing big money like day trading/ swing trading, then here is a lower risk way to trade - use binary options.
Ok, what are binary options?
A binary option, also known as a digital option or fixed return or “all or nothing “, is an option whose payouts are determined at the onset of the contract. It pays a fixed amount, between 65-80 % depending on the brokers, when the contract expires in-the-money.
Most binary options cannot be closed before expiration. When the binary option expires out of money, you will lose all your initial investment but will receive 10 – 15 % cash back.
Expiration time for trading binary options are: hourly,end of day, end of week or end of month.
When trading binary options, unlike the real options contract that trade in options exchange, there is no need to buy any stocks, nor pay any premium when the contract expires in the money.
Types of binary options trading
There are a few methods to trade, like Higher or Lower, One Touch (touches a given price within the chosen expiration time), Range (price fluctuating within a given range before contract expires, ie channeling).
How do you trade binary options?
In a nut shell, a binary option is really a bet on the direction of underlying asset like, stocks, indices, currencies, commodities.
You will be given a single price (no bid or ask price), known as " strike price", which will fluctuate in real time as the underlying asset moves and the expiration time, normally expires every hour, depending on the broker and method of trading binary options.
If you choose Higher or Lower method, for example,
time now is 17:00 and you are given a price on GBP/USD 1.5911 next expiration time is 18:00
You click on CALL or Higher or Above (depends on broker terminology) – if you think at expiration the price will be higher than 1.5911
You click on PUT or Lower or Below depends on brokers terminology – if you think at expiration, the price will be lower than 1.5911
You then enter the amount of money you want to invest/bet. (Minimum $10 - $30, maximum $1000) and click on submit/confirm.That’s all.
There is neither commission, premium nor initial margin to pay like traditional spread betting or real options trading.
If you were right by quite a lot or by a tiny amount, say the above binary option contract expired at a price of 1.5912 and you clicked on CALL, you would win 65-80% of your initial investment.
Likewise, if you were wrong by quite a lot or even by a tiny amount, you would lose your initial investment/bet, but would also get small cash back (10-15%).
What binary options trading instruments are available to trade?
You can trade binary options on
Indexes
Commodities
Stocks
Currencies
..And the list is growing from brokers to brokers with the number of tradable instruments.
Binary options trading strategies
My favourite is applying
Delta Phenomenon
technique. At certain time of day, the market will reverse. It will move from one low point to another high point or vice versa.
If you place your trade near these turning points and you can take advantage of trading binary options.
Also when news/economical data are released.
Trading range – sometimes, after a strong up /downward move, the asset will go into a tight range. This is an ideal binary options trading strategy to make money trading this “channelling “move.
This site specialises in providing free and subscription signals for binary options trading via email and has a proven track record to be right so far.
You may want to check them out and sign up to free trading signals which I believe is based on technical and fundamental analysis and can be used on binary options as well as normal swing /day trading.
Cutting your Losses and Reversing Binary Options Trading strategy
Some brokers like Globaloption let you close the trade even up to 2 minutes before expiration. You pay a premium fee.
So if you are losing just before expiration, you can just click on Buy ME OUT to close the trade.
You will get a little bit more than the default out-of-money option cash back (10%), if you close out early (15 % - the last time I checked).
Also, if you act quick enough, you can cut your losses even more by placing a trade in the opposite direction just before contract expires!
Yes, most binary options trading brokers allow you to do that.
Want to give Binary Option Trading a try?
Here are some good brokers that you can try and I believe, it’s open to everyone over 18 in any countries.
Anyoption -
This has more instruments to trade than most other binary option brokers like Asian indices and more stocks to trade. They also have One touch, Range, and Higher/Lower contracts.
You can close the trade before expiration as well if you are in profit, but you pay a small premium (about 30%). This "take profit message " will flag up for 5 minutes about 15 minutes before expiration.
There is hourly, daily, weekly and monthly expiration contract to choose. On a certain binary option contracts, you can also roll over to the next expiration time.
* From now till 31st December 2010, new Anyoption account depositing for the first time will enjoy from a 50% bonus of their first deposit.
The offer is for all new customers registering in English, Spanish, German, Italian or Russian.
Maximum bonus is 5000 on the currency used by the customerBonuses can be seen on section 'My Account' , 'Bonuses'Further conditions are located on the website's T&Cs
