Binary Options Trading is a great way for you to profit from the changes in value of various financial assets, without taking on incredible risk. Without the right knowledge, this definite profit will turn out to be elusive. Here is an excellent step by step guide that you can refer to when creating your trading strategy for profitable returns.
Step 1 – Be Decisive
To begin with, you need to make a firm decision on the type of Binary Option that you would like to trade. This means you make a choice between stocks, indices, forex and commodities. Do not make this decision lightly. Find out all that you can about your preferred asset, so that you are clear about the expected value resulting from your trade. This will also ensure you make the right prediction, either for a call or a put option.
Step 2 – Select Your Binary Option
The most common choices you can make for a binary option trade include the High/Low and a Touch/No Touch trade. The High/Low trade, which is the preferred option, allows you to predict whether the price shall go up or down from where it currently stands within a specific time.
Step 3 – Select Your Asset
At this juncture, it is assumed that you have already chosen the broker that you want to trade with (meaning the one you are basing your predictions on), and created your trading account. Keep in mind that any binary options broker you choose should be regulated and fully licenced for the safety of your investment. It also helps if the broker provides you with bonuses for every deposit you make into your account, as well as any additional benefits. Choose your asset based on your comprehensive research.
Step 4- Select Expiry Time
Once your asset has been chosen, you will have the option to choose your preferred expiry time. There will be a range of choices you can make, from a maximum of 60 seconds, or even selecting trades that expire in a month. The decision that you make regarding the expiry time should be based on the possible events that could occur in the future and ultimately affect your asset values.
Step 5 – Select your Investment and Determine your Risk
Based on your predictions, decide how much capital you are willing to invest for each trade, enjoying the added benefit of being able to trade small amounts. It is worth noting that risk remains fixed, meaning that the only amount that you can lose is what you are willing to put at risk. Once you have selected how much you want to invest, you will get information of what your pay-out shall be if by the end of the binary trade you are in the money.
Step 6 – Begin Active Trading
It is at this step that you begin real and active trading. Here, you enter the price that you want to trade, which will mean you are picking a High or a Low position. Once you have made this selection, it is not possible to back out of the trade, but until this point, there was not much at risk. On most sites, you will see a button labelled BUY, and upon selecting this button, you have traded a binary option. All that is left is the wait until expiry to determine whether you have made the predicted return.
Step 7 – Take Advantage of Available Tools
While you are contemplating how much you should trade and the possible return, pay attention to all the other tools which are available on your binary options trading site. Most sites will have updated financial news features, as well as listings of the most popular trades of the day. You can also review what is trending.
Amongst these tools are promotional offers that elevate your trading budget. These offers include loyalty promotions and sign-up bonuses.
While your Binary Option Trade is live, you are still able to opt for an early expiration if you want to minimize a loss, or tie in a profit. The number of minutes you have to do this before a trade expires will depend on the terms and conditions of the site that you are using. This means that with Binary Options Trading, you have flexibility, even after making an investment decision.
The more you trade in options, the easier it becomes to develop a strategy that can increase your long-term profitability.