Binary Options Guide for Dummies

The time span for trading options is indeed limited, but there is no need to sit in front of the PC screen the whole day long in order to get a nice share from the investments made. Idea behind binary options is indeed one of simplicity, however, there are some general rules one has to know in order to be able to run the trading platform and score profit. Pushing  Up/Down or Put/call will not be helpful unless tied to serious understanding of the market. This is why we recommend visiting Binary Options Academy to learn all the important aspects of trading and market analysis.

Understanding Binary Options

Firstly, traders must understand the options if they plan to make things work. Options can be defined as the financial instruments which are able to drive out their values from the varying underlying assets or from any other financial measure. In order to be cognizant of all the dimensions of the trading options, one should understand the stock to which they are related.

The prime focus in trading lies in considering all the conditions which are related to a stock, using the most suited trading mechanics and recognizing the trading rules. The core risk which trader faces while using the stock options is the time frame. The call option gains some value if the underlying stock to which it is related goes up. At the same time, a put option gains more value when its related stocks move downwards. In both of them, the timing factor remains the same and the move must be placed before the set expiration date.

Difference Between Options and Stocks

The options differ a lot from the stocks, especially in terms of the manner in which they are created and in what they represent. The differences between both of them are manageable, so there is no need to worry about technicalities. It is imperative here to always incorporate the different options into daily trading routines. The gist to understanding the mechanics lies in understanding the risks as well as the rewards linked to the process. Furthermore, test the options by using a no-risk or a low-risk mechanism.

How to Analyze Options

Options analysis, which includes overviewing the trending conditions and volatility conditions should also be kept in mind. This technical analysis will surely come in handy in the long run. In short, simulation of the best trading strategies and an improved working knowledge of the entire process is what the beginners should try to value.

Go to FBO Academy to Learn Binary Options Analysis

Putting All Your Options to Work

In terms of speculating the options, the contracts linked to them can be used as powerful hedging tools. Exercising all the facets of an option in order to minimize the risk can be termed to be a single manner in which traders can place their options to work.

Binary Options Minimum Deposit

It is possible to start trading with as little as $100. Fortunately, the market is opening for the middle class that wants to make a second income without having to take big risks and pay fees to brokers for handling their portfolio.

Anyone can trade binaries and at very low costs ranging from $5 to $25 per trade at any given time. When the deposit is made, don’t bet the entire amount in one go. It is important to get a feel of what and how it should be done. So, unless having prior experience with binary options trading, it is always good to place smaller bets.

It is widely believed traders need at least $1000 to apply a full risk management strategy. At the beginning of the trading career, it is relevant, however not needed, to apply a risk management system. After getting a feel for the market, traders can increase their trades gradually to gain higher returns. Indeed, it is highly recommended to try out a broker that offers a demo account that enables learning about the market without any risks.

Fundamentals of the Currency Market

There are few basic fundamentals that help the trader to understand the currency market and its current situation in order to make a better decision at the time of trading. But all those who have technical knowledge about this market will always be in a better position since they understand various charts and graphs that give them the opportunity to make a proper analysis and then accordingly trade.

Just by having a quick glance at any chart, experienced traders with great knowledge in financial trading will be able to understand why and how to invest in a particular period of time. In the long run, education is best investment one can make, and currency market is no exception.

More on the fundamentals

Traders definitely need to be quite vigilant when it comes to gathering the information and the accurate data with respect to both the currencies that they are targeting to deal with. Leaving one currency untracked might put them in the state of losing rather than gaining the profit as the currency market moves very quickly and can have rapid ups and downs.

Traders definitely need to be quite vigilant when it comes to gathering the information and the accurate data with respect to both the currencies that they are targeting to deal with. Leaving one currency untracked might put them in the state of losing rather than gaining the profit as the currency market moves very quickly and can have rapid ups and downs.

Obviously, it is impossible to be absolutely sure of the outcome of every trade. Traders must be patient, as there are always uncertainties associated with every trading and so is the case in binary trading too. This is the basic understanding of risk and investing and it is quite adequate to state that knowledge gathered in any field or domain must be regularly updated.

Binary Options Dictionary

  • Expiration Date: The time that the option expires.
  • Settlement Value: The value of the option on expiration. It will be $0 or a $100 fixed payout at the Nadex Exchange.
  • Underlying Market Price: The actual real-time market price of the contract.
  • Contract: This is the basic unit of a trade of one lot.
  • Bid: The premium price that traders pay for opening to sell a contract or closing a buy order.
  • Sell: This is when betting the underlying market will go down. A trader puts on an open sell order. At Nadex (similar to online binary option platforms) the trader pays for an open sell order which is $100 – bid. This is the same as putting on a position anticipating a drop in the price of the underlying market. Lastly it is the premium price that a trade pays for closing a position that was bought.
  • Ask: The premium price that traders pay for an opening to buy a position. This is essentially anticipating that the underlying market price will go up. It is the price paid by a trader who has an open position to sell and wants to close it out.
  • Spread: The difference between the bid and ask. The spread tends to be narrow in a new market as the volume increases. When discussing binary options the spread has to be interpreted in terms of the total return.
  • Bid size/Offer size: This reflects the number of positions being bought or sold.
  • Commission fee: The trader will pay a commission fee per transaction. Nadex charges $1 per transaction. Online binary option brokers have to pay fees to its software provider (also called the platform) as well as Nadex. Onine Binary Option Brokers usually operate with a small commission around 2.5%.
  • Set-and-let: When you take a position and do not trade in the same market until the time frame expires and the bet is settled. You basically sit and wait till you find out whether you win or lose.
  • ROI: Return of Investment

Binary Options Experience

When trying to find more about binary options trading it is best to search for binary options reviews. It is of great importance that websites presenting these reviews have a good reputation and offer relevant content in terms of strategy and other trading issues. Only sites like Fair Binary Options, that have experience in this field, can ensure the highest quality information. Fair Binary Options provides the best information and experience on binary options strategy, broker reviews, trading guides, news from the world of finance and more.

Best Guides and Strategy

Our long binary options experience is what guarantees the quality of our content and advice. Traders who do not have much experience trading binary options will want to take a look at the binary options guides and thoroughly check out the strategy section in order to be well prepared for all important market events. In order to trade on these events, those with less experience in binary options trading can always use the Binary Economic Calendar where traders can track upcoming events and get into positions before they happen. This way they can capitalize on huge movements in prices that follow.

Testing brokers so you don’t have to

Binary options experience is not only acquired by studying educational materials. Traders will want to test their trading abilities with brokers and their services. They are looking for ways to improve binary options experience and become a better trader. Demo accounts are a great way of getting binary options experience without investing real money and taking risks.