However, there are other new platforms such as 10trade that provide simpler and easy to understand alternatives for those with less financial knowledge. These options are also favorable to those who do not want to speed their whole day in front of a scree trying to follow every small movement of the Japanese candle sticks. From the comfort of your home or your office, you can be able to make an extra income through binary options trading by using very simplified trading methods and tools available online.
Binary option trading is trading in commodities, stocks, indices, currency, bonds among other investment assets without actually owning the underlying assets. All you need to do as the trader is to predict the price movement of the underlying asset and if your prediction is right then you gain money from your transaction. If however your prediction is not correct, you end up losing money in that particular transaction. This is a very easy way to make money in the commodities, stocks and bonds markets without actually acquiring the real underlying assets and without having to undergo the pressure of understanding the complicated investment strategies involved in those markets.
By just being able to predict whether the price of a commodity like oil will either go up or g down and do that accurately, you become a binary options trader! However, there are a few basic things you need to know before you venture into binary options trading. First you need to know how binary options trading works, know the different types of binary options and finally get a few tips on how to become an above average trader in this new financial markets segment.
Trading in binary options has close similarities with derivatives trading. Both binary options trading and derivatives trading involve predicting the price movement of an underlying investment asset. In both investment alternatives, if your prediction is right then you gain from the transaction and you are said to be in the money. However, if you are wrong with your predictions as to how the price of the underlying asset will move, then you lose money and you are said to be out of the money. Another similarity is that in both investment alternatives we have specific investment periods which are pre-determined when initiating the trade. We also have pre-determined gains which are also agreed upon when initiating the trade. Finally, in both cases you do not own the underlying investment asset, rather you just speculate on its price movement.
Back to binary options, there are two major types of the same. We have the call options trade which is the trade you place when you expect the price of the underlying asset to go up. For example oil could be trading at $70 and you expect that by the end of the day it will be trading at $85 due to sanctions imposed on one of the leading oil producers in OPEC. The binary option trade you place in this case is a call option because you anticipate that the oil prices will rise due to the changing macro-economic factors. If your prediction is true by the end of the day you make money; while on the other hand you lose money if it is wrong.
Put binary options are the direct opposite of call binary options. Here you make money when you become the prophet of doom and predict that the price of the underlying asset will fall. If for example you predicted that the price for oil from the example above would fall to $57 and it actually did fall, then you make money. If on the other hand the price went up, then you lose your money. This aspect of having to make a decision between only two alternatives while trading is what makes the trading be referred to as binary options trading.
To be good in binary options trading, all you need is to be consistent in following trends in the markets for the underlying assets that you are trading on. For instant if you are trading in gold, you need to keep tabs of the latest trends in the gold market and other macro-economic factors that might affect the price of gold. This is not a difficult thing however since there many online business and economic news sites to keep you are informed. In addition, to be a veteran trader you need to separate your emotions from the trading and let the facts from the market analysis advice your decision making before you place any trade. Finally, keep trading and the more you do it, the better you shall become and eventually be a master of the game.
source: 20smoney.com
