Because of its simplicity, binary options are becoming extremely popular these days. Many investors choose to trade binary options instead of usual stocks or trade currencies in an usual way. It is easy to explain why, there is much higher profit margin and trader knows exactly when his trade will end. Currencies, stocks, indices and commodities are assets that traders can choose to trade. What is required of a trader is:
- his ability to determine the trend of the specific market;
- to tell whether the market will go up or down for his chosen asset.
This is, by far the quickest and simplest option available in the market, with a capability to generate highest returns. So let’s look at the key steps in the trading process.
Step One – Choosing the asset
The first step in trading binary options, is to choose your preferred binary option asset, such as the Nasdaq 100 Index, from the trading section. If you have signed up with a reputable broker, there should be available around 70 option assets to choose from. The main binary options assets include stocks, commodities, currencies or indices that you can select from one of the many financial markets worldwide.
Step Two – Expiration time limit
Your second step in Binary options trading is decide on the time you want the binary option to expire. Binary options have a short offer time, approximating to 60 minutes or less and should be traded 10 minutes prior to expiry. There are also offers that end in the end of a month, week or day.
Step Three – Predicting the direction of Binary Option trade
The third progressive step in binary options trade, is to determine in which direction the current price will go, will it move up or down? If you expect the strike price to be higher, you want a CALL option. If you expect it to be lower, a PUT option is the go. It does not matter how much it moves above or below the strike price, just whether you expect it to be more or less. This is the feature that distinguishes Binary options from a variety of other types of trading products.
Step Four – Investment amount
After completing the first three steps, the next step is to assess your investment amount that you wish to invest in the binary option. We recommend not to invest more than 1/10 of your portfolio. Preferably you should have a strategy that you are using when making trades. In the long term, playing roulette will not work. Consider learning more about binary options trading strategies. You may also consider using binary options trading signals to ease your trading decisions.
Step Five – Click to trade
The decisions are made. Now all you have to do is click to trade and then wait for the binary option to expire. The only thing you can do now is sit back and wait. Hopefully your trade will end in-the-money, and you will become richer.