Binary options are financial products based on assets that include commodities, stocks, foreign currency and future. Investors place investment monies on whether an asset will rise or fall over a prescribed period of time. If however, your predictions are wrong and the asset falls short of the goal, you will lose your investment. Investment returns are fixed which reduces the risk.
Each trade has its own pros and cons and the basic or “vanilla” trade is the easiest to learn. When engaging in a basic trade the current price of the asset you are interested in is shown on your trade screen. You will be queried for a prediction. If you believe the price will be higher than the “call” option you click on an up arrow. If you predict the price to be lower you purchase a “put” option which is indicted by a down arrow.
The time to hold the option is the Expiry or “future time” and to “win” the trade the price must meet your prediction at the time the clock expires. You are not allowed to pull out or change your trading price until the asset has expired. If you are right you will received a fixed payout, but if you are wrong you will lose the money you invested or placed on the commodity, stock or money fund.
If you feel that the asset will rise or fall in a different time level than the set expiry time, you can always make a change by using the drop down menu. Click on the expiry, change the time and history continue on. If you wish to choose a different asset, use the same technique. Click on the drop down menu and change assets.
It is up to your discretion how much money you want to invest on an asset. You enter the dollar amount you are trading in the provided amount box. Select call or put and click on the buy tab. You will know immediately what your potential return will be. If you place a trade amount of $100 and the potential return is 150%, you will gain $150 at the expiration time if your prediction is correct. If your prediction was wrong, you will lose 100% of your investment or $100.
You can choose to trade on many different types of assets. The type available on your trading platform is determined by your broker. Major forex pairs, stock indices or the S&P 500 or Dow Jones Industrial plus gold, silver, oil and agriculture commodities can be a part of your platform portfolio. This gives you many different opportunities to make large sums of money if you are good at speculating and predicting.
Brokerage houses will offer individual stocks on their platforms. You will not be able to trade in all stocks but about twenty or more popular stocks can be offered for binary options trade. Use the trade screens offered on brokerage sites to determine what individual stocks you would find exciting to trade.
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