CHOOSING THE BEST BINARY OPTIONS BROKERYou should choose one that ideally matches your preferences and aspirations. Its the first decision you will need to make when you consider trading binary options. In particular, you should perform an in- depth analysis of the trading platforms provided by your short-listed candidates. Essentially, you require a tool that is totally reliable and will allow you to execute your trading decisions promptly and with great accuracy.How easy is it to trade binary options? The process could hardly be simpler. Just perform the following simple steps which are illustrated by relevant examples.
STEP 1 – CHOOSING AN UNDERLYING SECURITYStep 1 – Choosing An Underlying SecurityBegin by identifying a suitable asset on which to construct your binary option. You can perform this task by locating a wide-ranging list of assets on your trading platform from you can make a choice within the main categories of currencies, indices, stocks and commodities. You can utilize your own studies and analysis to help you make this decision. Alternatively, many traders prefer to use the expert recommendations provided by their brokers or professional advisors.EXAMPLESYou select the AUD/USD after undertaking an in-depth technical and fundamental and technical study. You locate the asset on your trading platform and record that your broker will pay-out 85% on a winning result and 10% refunds on a loss.Your broker texts you advising that a CALL binary option should be initiated using OIL as its underlying asset. A payout of 70% and a refund of 15% are displayed on your platform.
STEP 2 – WHICH DIRECTION WILL PRICE MOVE?When trading binary options, your main decision is to select the direction in which the price of your favored asset will advance (i.e. down or up). You do not have to consider the size of its movement whatsoever.EXAMPLESYou conclude that the AUD/USD will most probably climb within the next few hours.Reduced tension in the Middle East is set to cause the price of OIL to plunge over the next few days.
STEP 3 – CHOOSE AN EXPIRY TIMEYou now need to determine the time period which will provide the optimum chances for the price of your asset to expiry in your preferred direction. Keep in mind that you just need price to finish one trading point in your chosen direction for you to record a win.EXAMPLESFor the AUD/USD, you opt for an hourly expiry time.For your OIL option, you select the daily expiry time.
STEP 4 – IDENTIFYING CONTRACT TYPESThese days, brokers provide a variety of different types of binary options to trade including HIGH/LOW, RANGE, ONE-TOUCH and 60 Seconds, etc. You decide to stick with the original and most simplistic choice which is the HIGH/LOW. As such, you will finish in-the-money if price terminates just one trading point above (CALL option) or beneath (PUT option) its opening price at expiry.EXAMPLESInitiate a CALL option for the EUR/USD.Instigate a PUT option for OIL.
STEP 5 – DECIDE HOW MUCH SHOULD YOUWAGER?You should ideally utilize a well-tested money management strategy to help you determine a sensible size for the percentage of your account balance that you would like to wager on your binary option. Experts advise not risking more than 2% of your entire balance per position as a rule of thumb.Assume that your account balance is $2,000.EXAMPLESYour stake is $40 for the AUD/USD.Your wager is $40 for the OIL binary option.
STEP 6 – INITIATING BINARY OPTIONSEXAMPLESClick the CALL button for the AUD/USD option which then shows an opening value of 1.0310.Click the PUT button for the OIL trade which then produces a strike price of $90.00 per barrel.
STEP 7 – AT EXPIRY TIMEEXAMPLESAfter one hour, the AUD/USD posts 1.0325 recording a win. You collect an 85% return of $40 = $34.After one day, OIL stands at $91.03 registering a loss. You receive a 15% rebate of $40 = $6.The simplicity of trading binary options is clearly demonstrated by the above examples. They also show why binary options have leapt in popularity in such a short space of time.