More and more people are turning to Binary Options as a way to start dealing and profiting from financial markets. Not only does this offer an easy way to start trading, it can also prove highly profitable. This is why it has become one of the fastest growing forms of financial investments that you can get into online.
Here we answer the five most common questions for people looking to get into Binary Options trading.
1) How do binary options work?
The concept behind Binary Options is actually fairly simple. Contracts are placed online with a Binary Options broker and provide an ‘all or nothing’ outcome at expiry. These trades are placed on a dedicated binary options trading platform that allows the trader to select the asset they would like to profit from, over what time, and the conditions of the contract. It is important to understand that no direct investment is made in the asset specified in a binary option trade. Instead the contact is made between the trader and the broker, who will pay-out on the contract, provided it does not breach the conditions set at the outset.
This is the where Binary Options offer many key benefits. To profit, you simply need to be able to correctly forecast whether the price of a financial asset will move higher or lower over the set time length of a contract. These contracts can be set to run from just minutes, to over several hours or even days. At the end of the contract you earn an agreed pay-out, provided that your forecast was correct. If your forecast is not correct, the outcome is also specified in the contract. In most instances if the option expires ‘out of the money,’ the investor loses their investment.
3) What assets can I trade?
From a single account you can trade pretty much all key financial assets. These include Stocks, Indices, Forex pairs, Market Sectors and even some commodities. As a result you can choose to trade strategies on widely different assets, and jump between markets as opportunities arise. Ordinarily you would need several accounts to access all of these markets. However, with Binary Options you can get access to all of these markets from a single account, even those that are traditionally difficult to gain access to.
The great thing about trading Binary Options is that you don’t need a lot of money to get started. The minimum required account deposits are some of the lowest in the financial industry. As competition has increased in the industry, brokers are now allowing new clients to get started with ever smaller amounts. Most of the mainstream regulated brokers are allowing you to open an account and get started with just $200, or the equivalent amount in your particular deposit currency.
When it comes to opening trades you can open positions for only a few dollars. This means that even with the minimum deposit amount you can trade a reasonably balanced strategy from the start. Of course it’s important that you don’t get carried away, especially when you are just getting started. As with any other investment, it is wise to look for ways to minimize your risk. A good rule of thumb is to risk no more than 5% of your available account balance on any one trade. It may be tempting, but you should always ensure you remain disciplined if you want to be successful. Since every trade is not going to be a winner, you have to be disciplined and smart when trading binary options.
To start trading with binary options, it only takes a few minutes to open up an account with a broker. Binary options brokers make the account signup process simple with registration being free to new clients. Then when you’re ready, simply deposit your funds and start trading.