Beginner Binary Options Winning Strategy
Beginner binary options winning strategy
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Welcome To Our New Traders “Dummies Guide” On The Basics Of Binary Options
- What is a Binary Option?
- Types of Binary Option Trades Available
- Basic Strategies
- Tools You May Want
- List of “Things To Know”
- Example Trades
- Getting Started
What Are Binary Options Themselves
very simple option contract with a fixed risk and fixed reward
A brief example would be that you predict the price of gold to rise from it’s current price of “12.75” one hour from now. The winning trade offers a return of 80%. You place a 0 trade on this idea.
One hour from now the option contract expires (closes) and the contract is graded as a “win” or a “loss”, or “in the money” / “out of the money”. Gold goes up to 13, you predicted correctly. You get your 0 back and a return of 80% – or for a total of 0. Even though gold only went up a tiny amount, you still earn the 80% return. Magnitude of price movement is not a factor in the amount of your return.
Key Ingredients Of A Binary Option Trade
- Expiry Time
- Strike Price
- Payout Offer
Types Of Binary Options Available
Tools You May Want To Use
Key Things To Know About Binary Trading
So now you understand the basics of trading binary options. Some key things you should remember before you dive in are these:
- Your risk is limited to your trade amount
- The minimum trade is as little as
- You do pay for losing trades – you lose your trade amount (or the majority of it)
- There is plenty of risk involved. Never ever invest more with a broker than you can afford to lose. It’s risky!
- You never take any ownership of the underlying asset – you only “bet” on the direction of it’s price movement
- To make money over the long term you have to win the majority of your trades
- Up / Down are only 1 type of binary option, there are many different kinds of trades available to make with binaries
- Trading binary options is designed to be easy to do.
Your risk is limited to the amount you place on the trade. Your payoff is clearly stated before making the trade. If you win a binary options trade you win a fixed amount of cash. Since there are only two possibilities, that’s the origin of the name “binary options.”
- Up or Down aka ‘Call or Put’
If you think the price of “Gold” is going up you place a “call”.
If you think the price of “Gold” is going down, you place a “put”.
Those are your only two options. Hence “Binary”. If you pick the right choice of the two you win the trade. If you pick wrong you lose the trade. There are two choices only. ‘Up or Down’. And two outcomes, ‘Win or Lose’.
the very basics of binary trading
“X” can be any number of underlying assets. It can be a certain stock or it can be the price of gold or oil. It can be a currency pair or it can be the price of facebooks stock. You get to choose what underlying asset you want to trade.
There is one more important factor left out of the simple illustration above and that is the expiration time or maturity date of the option. This is the point in time when the trade expires. This is the point when the actual price of the underlying asset is determined and you find out if you finish the trade ‘in the money’ with a win, or ‘out of the money’ with a loss.
Example Basic Binary Trade
The easiest way to explain what a binary trade looks like is to provide an example.
Example Trade 1 – Trading Googles Stock With A High / Low Binary Option
Perhaps Google is doing well and you expect it to be trading above 2.10 by 3:30pm est this afternoon. A binary trade means you place a bet on that theory.
Above is the corresponding candlestick chart for Google, from FreeStockCharts.com. You can use this to read price action and find trading opportunities.
When 3:30pm rolls around and Googles stock is trading at or above 2.1.00 as you predicted, you’ll be paid 00.00. This includes your 00 you put up on the trade up front and the 70% return (0).
If you’re wrong and the stock is trading at less than 2.10, you receive 0, a 10% rebate, losing 0 total (Your 00 investment amount minus the 0 return = 0 loss).
In the example above, 2.10 is called the “strike price.” Since you bet in a positive direction, we would refer to this as a “call,” not a “put.” 0.00 is the “payoff value.” The date and time are called the “expiration date,” or the maturity date. The 0 is the losing return, or a 10% rebate offered sometimes on trades. Not all binary option brokers offer rebates on trades that finish out of the money.
You could also have bet in the opposite direction, that the stock’s price would be trading at or below a certain lower value, which would have been a “put.” In that situation, you would need google to finish below the strike price. Usually, this would be a few pips below what the strike price would be if it was a call. This price is set by the individual broker along with the returns offered. It is up to the trader to take the trade or not.
Example 2 – Tutorial on Trading The Price Of Gold With A ‘Touch Trade’
You bet 0 that the price of gold will touch 17.40 by 3pm EST today.
The payout for this trade is 70% if you finish in the money. If you win, you will get a payout of 0 which includes your 0 risked up front plus the return (70% of 0 = ). Since a 70% return is a bit low on the payout side, the broker offers a 15% rebate on losses. If you lose, you get back and only lose instead of the full 0. You can see how this can offset the lower than average return for wins.
You place the trade and need the price of gold to reach the target price, or trigger price of 17.40 before 3pm today.
A General Trading Example
- Choose your underlying asset. IE gold, currency pair, stock etc.
- Decide how long until you want the option to expire. As little as 60 seconds up to a days or week. Common expiry times are 15-30 minutes.
- Choose the amount you wish to risk. As little as , as much as thousands.
- Decide which way you think the price is going to move (up or down).
- Click “Up or Down” and hit the “Apply” Button – just before hitting “Apply” you will see the exact payout if you win or lose.
- At expiry you have either won or lost and get the fixed payout offered prior to hitting the ‘apply’ button.
- You can not lose more than your risked amount and you can not make more than your fixed return, regardless of how far the price moves.
Binaries are one or the other choice with a one or the other payout or loss. Winning returns average 70-85% at the respectable brokers for most trades. If you lose, you get between 0-15%. Some brokers kick back some percentages on losses, that’s why their winning returns are sometimes a bit lower compared to the other brokers.
Things To Remember Before You Begin Making Option Trades
- Risk is known up front and fixed. You can not lose more than you put into any trade.
- You are not and can not get burned by leverage like you can with forex trading.
- You do not need to set ‘stop losses’. The return is the same whether you win or lose by 1 pip or 100 pips.
- Payouts are clearly stated and known exactly up front before risking any money on the trade.
- Most of the brokers we list have early closure feature. This lets you close your option at a price they are offering any time up until the final closing minutes. You can lock in profit or minimize loss with early exit
- Executing the trade is easy. Choose your asset to trade, how much to risk, choose ‘up or down’ and click the ‘trade now’ button.
- Returns are 70-85% on average at the trading brokers listed here.
- No hidden costs – Your risk and full return are clearly listed.
- You do not have to be a financial “expert” to win.
- You never take any actual ownership of the underlying asset. You are just predicting what happens to the price of the asset.
- Your trade comes down to a ‘one or the other’ choice (hence binary)
- The trading is simple by design
- Begin Trading Binary Options Online Tutorial
Trading Binary Options For Dummies
Anyone can trade binary options. Even a dummy can win any given binary trade, too. It is one or the other choice, it is hard to get it that wrong all of the time.
- Get a Free Demo Trading Account – Risk Free at Marketsworld (details within link).
- Today’s Best Binary Brokers
- Binary Option Trading Strategies 101
- 60 Second Binary Option Trading
From earning a little extra money to making a full time living, or making a lot of money in a short span of time, binary options trading is an excellent way to achieve all of this. As it slowly gains popularity all throughout the world, thousands are making good money with little or no prior knowledge of the subject, however, binary options trading isn’t a cake walk: success can be achieved and risks can be minimized by following the tips mentioned below:
9 Tips for New Traders to Trade Binary Options
- The first and foremost advice to be given to any beginner trader is to select a good binary options broker for your help in this field. A good broker, who knows his work, makes all the difference. There are various comparison websites available to make this choice easier for new traders, so one can quite easily consult these websites and choose a good binary options broker of their choice.
- Secondly, it is advisable to increase your knowledge in the field of binary options trading and to know that there is always more to learn. There are training courses available for imparting binary options trading knowledge to new traders. Reading new books on the subject matter and discussing with other traders about the matter also adds to the benefit. This type of trading is a constantly-evolving experience, hence knowledge on the matter is ever expanding.
- Thirdly, trading long term serves better returns, and binary options trading is a long term activity. Developing a long term plan for your binary trading and playing the right cards will ensure that you ultimately come out on top. Resist the temptation to get drawn into fads that do not fit into your overall strategies and strictly stick to your drawn plans.
- Fourth is to reduce your risks by resisting the urge to over-invest. Beginners tend to get carried away to make that one big score but they must employ some self control as that may be a game changer. New traders lose more money by getting carried away and over investing. Binary options brokers advise to invest not just with courage but also with rational thinking.
- Fifth, it is essential to keep a clear head while making any decisions about binary options trading. Beginners should avoid trading when they are emotionally disturbed, as emotions can create havoc with your trading. It is very easy to make the wrong decisions in an emotional state, so it is advisable to stay away from any form of trading until you’ve calmed down and cleared your mind.
- Prepping yourself before trading in binary options is the sixth advice. Studying the market and viewing graphs over time can help new traders predict behavior of any binary options asset, thereby helping them to make well-informed decisions.
- Another very important piece of advice would be to keep apprised of trading news. Keeping ears and eyes open to catch breaking news about the market condition can get the binary options trader a clear view of current situations, making it easier for him to trade during market crashes. By understanding the root cause for market changes, the new trader can help corner the market when it rallies or crashes.
- Hedging trades against each other just ends up decreasing the statistical probability of earning more profits as opposed to increasing them.
- Last, but not least, it is very important to have fun while trading binary options. Beginning binary options traders must ensure that it does not become a bore or a drag; if a trader has fun while trading, then he or she will be naturally inclined towards it and will pay more attention and make better decisions, thereby increasing profits.
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