Truly, it’s really not that complicated, at least not in theory. The word binary, in a nutshell, means something with two parts. For instance, a person who sees issues as black or white or as good or bad, has a binary point of view of his or her world. It’s either this or that, yes or no, hot or cold, thats it!
For Binary Options traders its all about the rises and falls of assets in the market. Making predictions on whether or not stocks (as an example) will rise or fall in an allotted time frame. This may also be true when trading in traditional markets, but those bets are made on the principle of the buying and selling of tangible assets. In Binary Options, you own nothing, you buy nothing, you sell nothing, you only bet on the movements, up or down, of those assets. Still with me? I thought so, lets move on.
“Calls and Puts!”
What are “Calls” and “Puts” you ask? “Calls” and “Puts” are what make Binary Options, binary. It’s that straight forward, you are either placing a “Call” or a “Put” option on a trade, that’s it, its one or the other. A “Call” option is a prediction that comes with the expectation that the price will rise, while a “Put” option is a prediction with an expectation of a fall in price. This is the basic mechanics of placing a trade for a binary option.
Add the “Strike Price” and you’ll have completed your very first trade. The “Strike Price” is just a fancy way of stating when you want your trade to expire. The “Strike Price” is the moment of truth for your prediction. Did your research validate the outcome? Still interested? I thought so!
Wondering what you can trade on?
The segments of the market where Binary Options traders can play are in Fortex-FX (currencies market), Commodities markets (consumables), Stock markets (publicly traded companies), and Indices markets (Market Index’s). That said, your choice of broker will finally determine who and what exactly it is you can place an option on. You may now be wondering how and where you begin.
Information is King! Be Your Own Expert!
Now that you’re surrounding are coming into focus its time to start digging a little deeper… a lot deeper! Research is your friend, focus is your weapon. Figure out what market interests you the most and focus your attention a small segment and make it yours. How do you do this, you ask? Read the financial papers, join financial blogs, engage in conversations online or in coffee shops. Know your segment of the market. Learn to understand how outside forces can affect your prices, look for patterns.
This is real work and there are no short cuts, become an expert. It can be done, it just takes time and the will to get where you want to go. Feeling pumped? Then go for it!