Binary options, also called exotic options, are types of investment offering two outcomes, hence the word “binary”. A trader can be right about his investment choice and make up to 88% profit on top of the invested amount, or wrong and lose up to 100% of the invested amount. Binary options are considered to be the simplest financial instruments, but it doesn’t mean that they have limited functionality or can’t be traded on a professional basis.
One of the best things about binary options trading is predefined risk and high potential profit. You can never lose more than you are willing to invest, which gives you a huge advantage when you are just learning how to trade binary options or practicing your trading techniques. With binary options trading it is quite easy to apply reasonable risk management methods and even newcomers who do not know much about economics and financial markets can find themselves profiting on binary options trading within short period of time.
Binary options trading is based on the prices of 4 types of underlying assets: currencies, stocks, commodities and indices. Each type includes a wide array of assets traded on the world stock exchanges, which makes binary options trading available in all geographical locations. Variety of underlying assets doesn’t mean that a trader must trade all of them. Most traders stick to one class of assets or even one particular asset, for example gold or EUR/GBP currency pair.
Binary options are short term financial contracts with expiry times ranging from 60 seconds to several weeks. Most popular expiries are 15 minutes, 30 minutes, one hour and end of the day. 60-second options are considered to be a risky type of investment but they are favored by experts of technical trading analysis, which is based on interpretation of chart patterns and trends.
Binary options are conveniently traded on on-line platforms of binary brokers. No software download is necessary unless you choose to trade on the go on a trading mobile application which can be downloaded on your smartphone or tablet. Many underlying assets are traded only at certain times of the day, and it is always great to have a mobile application installed on your mobile device, so you can open a trade when trading conditions are the best.
The key element of successful binary options trading is choosing a right binary broker to trade with. The first thing to look at is a broker’s regulation status and a license to operate on binary market. Binary options entity has to be an authorized investment company, and that information should be visible on the broker’s website. Many binary options brokers are located in Cyprus and regulated by Cyprus Securities and Exchange Commission.
If you are new to binary options trading and do not know how to trade binary options, all you have to do is to open a trading account on the web-site of the chosen broker. Once you do it, you will be contacted by your trading manager who will guide you through all procedures of account funding, educational process and platform features. Modern binary platforms are pretty much self-explanatory and most brokers offer video lessons to help new traders understand principles of binary options trading.
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