Types of Binary Options Traded
Anything that is traded in the global financial markets can be subject to a binary trade. Many trading platforms, including our own here at Bank of Trade, will offer a wide variety of trading options and opportunities, while others might specialise in a particular area.Typically, the following options will be available for you to trade:
- Stock options for publicly traded companies, from large corporations such as Facebook and General Electric to smaller public businesses like Questcor Pharmaceuticals and NIC.
- Foreign exchange and currency pairs. As well as trading options based on the performance of individual currency, you can trade currency vs. currency by placing a call or put trade on whether the US Dollar will increase or decrease against the Euro, for example.
- Indicies based on the performance of an entire market, such as the NASDAQ, FTSE, and Nikkei markets.
- Global commodities, allowing you to be involved with gold or oil options trading, along with many others, if you wanted to be.
As well as global markets, some online platforms will enable you to access individual markets, so if something grabs your attention in the Middle East or Africa, for example, you have the opportunity to trade. Emerging markets such as these can be particularly fruitful for those involved with digital options trading, especially when prices are increasing rapidly and one-touch options are available.Again, the “all or nothing” nature of this type of trading means anyone can get involved with only a basic level of knowledge of how financial markets work; it is as simple as reading a chart and identifying a trend!
Binary Trades: An Example
If you are new to binary options trading, it can be difficult to understand how returns are calculated. To enable you to understand how it works, we have put together a step-by-step guide of the process you will go through when you start trading. For our example, we have used gold as the commodity, but the same would apply whether you were trading indices, foreign currency, or individual stocks.
Your online platform asks whether you believe gold will be above $1000 by 12pm. If you believe that it will be, you would place a call trade. If you disagree, you would place a put trade. If you already hold a call trade but believe the price will fall, you will also have the option of selling the call trade.It is now 11am, and the price of gold is $970. You believe it will hit the $1000 price by 12pm, so you purchase a unit of five call options, which may cost $50 each. We know that you will either have a nil return, or earn $100 dollars for each unit, depending on whether your trade expires in the money – at $1000 or above – at 12pm.From this, you can calculate the risk you have taken on and the potential return.
- Potential return = $100 x 5 units = $500.
- Options purchased at $50 x 5 units = $250.
- Potential profit from a successful trade = $500 return – $250 purchase = $250.
At 12pm, gold has hit $1007, earning you $250 profit.Selling a call or put trade prior to expiration is possible, and this is usually done as a means of limiting losses if you feel your trade is not going to expire in the money. These can be difficult to sell on, particularly if the expiry time is close, but it is often possible to sell trades to investors with large amounts of capital who are happier to take on an increased level of risk and can afford to take the chance.
How to Maximise Your Earnings Potential
Any investment or trade invariably takes a road back to the same question: “How can I make the highest possible amount of profit?” As with any type of financial transaction, much depends on the strategies you look to employ throughout your binary option trading.Using a range of strategies should, over time, enable any trader or investor, particularly as they become more experienced and skilled at trading, to maximise profits and limit any losses they suffer. The latter is especially important; the pitfalls of chasing losses are well known in respect of all types of trading and investing, but it can be easy to fall into this when binary trading as one successful trade can fast recoup a loss.Binary options trading beginners ought to spend some time taking in the articles and resources featured here on Bank of Trade, so they can gain an intimate understanding of managing their trades and strategies for doing so. This type of trading is unique in that you may find yourself taking higher levels of risk for smaller rewards than you ordinarily would. Establishing your knowledge of binary stock trading will enable you to devise a strategy for success; you should also consider connecting with experienced traders and investors through the many binary options trading forums that are available across the internet.
Improving Your Trading with Bank of Trade
If you are smart and calculated with your investments or trades, huge profits can be earned from binary options in as little as 15 minutes. If you ever read an article online, or in a magazine or newspaper (most of us have!), about a trader who worked for no more than 15 – 30 minutes a day and made a fortune, and doubted it, then you are about to learn how it could become reality. At the same time, we must be clear that trading binary options is not some kind of “get rich quick” scheme, and nor is it glorified gambling. You will only be successful if you take the time to understand how to make the most of your trading and take in all the available knowledge and learning, both online and elsewhere.At Bank of Trade, we offer our binary option account holders access to real time data and tools, as well as to wisdom from experienced, successful traders, giving them every opportunity to learn, improve their own trading, and ultimately make the levels of profit they desire. Whether you are new to binary options trading or even to online financial platforms entirely, or have had some involvement with these in the past, our resources will enable you to become even more competent using our system.In addition to these opportunities, you can also enjoy support in whichever way you prefer, be it live online chat, email, or telephone, when you are trading so you are always sure of what you are doing. We will not tell you what to do in terms of placing your call or put trades, but we can make things clear and easy to understand so you can benefit when you start trading.
Pros and Cons of Binary Option Trading
Like anything in life, there are upsides and there are downsides to binary option trading. However, one positive feature of the negatives is that you can control most of them yourself; the downsides of binary trading usually only come into play if you make choices that facilitate this.The biggest advantage of trading binary options instead of using other spot trading platforms is tat you know the riskeward balance when you buy your call or put trade. In contrast, while you have historical data when trading forex or on the commodities markets, in reality you have no idea what your potential losses or gains might be. Yes, you could probably run this through a simulator similar to how a private equity investor would use deal flow software, but ultimately it is all hypothetical data.The range of options available is also beneficial, as traders can assess various assets and act accordingly whenever a market is open. Compare this to a forex or commodities trader who uses these markets exclusively; where do they go when their markets are in decline or stagnating? The simplicity of binary options is most often cited, especially to beginner traders. Because a trader can simply address the yeso question of whether something will hit a certain price, they can get started immediately.One of the most notable downsides of binary options trading is that, while the “all or nothing” nature is attractive, it often means traders have to be correct with their call or put trades a high percentage of the time in order to make good money. You are in control of this, however, as you should only lay high sums of money when you gain experience and are confident in your ability to be correct more often than not. While critics of binary options trading often cite this method as gambling owing to the riskeward balance, the truth is that smarter investors who understand the market are making educated trades, with only a small element of chance involved. After all, it is impossible to predict with 100% accuracy how a market will behave.Also, when binary trading the trader has to predict the time when the price will be higher or lower. This adds pressure to binary trades, whereas with other spot trades you can simply hold your position and then sell when you reach your stop-loss limit, or when you believe a price has reached a peak.Another potential con of binary option trading is the level of regulation present across the market. Regulated binary options trading platforms are available, including at Bank of Trade, and they should be sought at all times. Using unregulated platforms might be tempting, particularly if inflated returns and the like are advertised, but you will ultimately be taking an increased level of risk not justified by the potential returns.
Identifying Potentially Lucrative Trades
If you are looking to get started with options trading right away, you can look at two main options for identifying ‘easy win’ trades. We have summarised these below:
- Identify assets, currencies, commodities, or stocks that are underperforming or that have recently been the subject of controversy. For example, if a publicly traded company has recently released their year-end accounts, and profits were massively down against expectations, the share price would have inevitably plummeted. In the most serious situations, the CEO of a company might lose his or her job, and the incoming successor will announce a number of plans and ideas for turning the business around so it hits targets once again. Alternatively, it might be the case that, over the coming days, people start to see that the results, while bad, were not as serious as initially feared nor terminal within the context of the future of the company. While financial traders might like to emit a cool, calculated vibe, the truth is more that they are as prone to panic as anyone. Whenever there has been an unexpected crash, growth is almost certain to follow. Stay in tune with the news and place your trades for easy wins at the opportune times.
- Binary options trading is popular among traders because it offers opportunities when markets are stagnant. Even in the most challenging economic conditions, markets do not stagnate forever. If a commodity, asset, or share has been steady for a prolonged period, it is likely to increase or decrease in value in the near future. Remember that when you trade binary options, you only need a minute movement for a call or put trade to expire in the money. While stagnant markets are a turn off to traditional investors and traders, to those involved with binary options, they are a massive opportunity, particularly when dealing in 60-second and one-touch trades.
Summarising Binary Stock Trading
The nature of trading binary options means not just finance experts and professionals are able to use such platforms for generating revenues. At the same time, it must be recognised that you cannot hope to enjoy success with binary trading or any financial platform without committing to understanding exactly what it is you are doing. Dealing in binary trading options requires you to be able to think on your feet and make fast, clear, and decisive decisions based on the data at hand. While it is a fast moving method of trading, anyone with a head for figures and a business-centric brain can exploit the huge opportunities on offer.Using a platform like Bank of Trade enables you to access a wide range of global markets, as well as benefit from expert analysis and advice designed to make you the most successful binary trader that you can be. Before long, you will become a credible, confident trader yourself, and so not rely on what you learn at Bank of Trade, although our resources will always be there to assist and guide you, whenever you need to access them.Be sure to understand what binary trading is 100% before you sign up to an account or begin to work with a broker. You need to know everything from how you get paid to any commissions and fees that you are subject to, and everything in between.
Get Started Now at Bank of Trade!
Getting started with trading binary options is easy at Bank of Trade. Now that you know all you need to about binary options, what they are, and how to trade them, we will share the simple process of getting online with us and starting to make your own profits.What do you need to do?
- Step one is to open your account, which is a guided process that takes a matter of minutes. Simply fill in the necessary information and confirm your account in the email we will send to you.
- Account opened, you then need to add some funds so you can start trading right away. You can use a range of debit and credit cards, and fund your account with a variety of global currencies.
- Choose the markets you wish to trade in. It is preferable to stick to one that you already have prior knowledge of, but if you are totally new to online trading simply choose the one that interests you the most.
- Make your first trade by buying a call or put option, then come back at the expiry time to see whether you are in the money.
- Use the wealth of resources available at Bank of Trade to further enhance your knowledge and become even more proficient at trading binary options.
Are you ready to take advantage of the opportunities binary options trading can bring to you? Why not open your account at Bank of Trade now and start trading immediately.