Binary options traders collect a pre-established return amount on all trades that end in the money. Anytime a trade ends out of the money, it is just the investment amount that was chosen by the trader that is lost. It is this clarity that makes for easy money management and of course helps when making trade decisions. This forthright process provides for a high level of risk control as well.
Take a Call or a Put
Because these trades are of a fixed duration, traders do not have to make many of the same choices that traditional market traders must make. There are no stop losses and there is no necessity to pick or exchange shares, since none are bought in binary options trading. While trading with some brokers, there can be a Sell option, but it is mainly used as a way to reduce losses any time your chosen asset is not progressing in the expected direction. This option is not mandatory though, and may be entirely disregarded if you so choose.
Fundamentally, a trade is the estimation of whether the value of your chosen asset is likely to rise or to drop. The asset price will have to be either above or under the entry price when the trade expires in order to receive any money. Let’s take a look at the way a basic Put or Call trade works…
Selecting an asset is the first step. This asset is only being used for a singular trade and therefore you will in no way own it. As soon as the trade is completed, so is your link to that asset. Once an asset has been decided upon, you are going to get started on the analytic process. While you do take expiry time into consideration, the expiry period is not actually determined until you secure your trade.
In a basic trade the objective is merely to estimate if the price is likely to be over or under the opening price point at the time that the expiry time ends. Your broker will display the entry price. Keep in mind, though, that this price may change. In the event that you see an entry price but do not act until a later time, it is possible that the price may be significantly different when you do return to finalize the trade.
If you believe the asset price will have gone up at the end of the expiry period, choose a Call option. If down, choose a Put option. The investment sum is your decision, but keep in mind that minimums, however low, do apply. Most 60 Second trades can start at as little as $5 and can go up from there. The minimum for most standard binary options trades is around $25.
Both basic Put or Call trades and 30/60/120 second trades function in the same manner. The sole difference being the expiry time choices. The 60 Second trades are the best option for quick trades. For a bit longer expiry time frames, going with the basic trades may be a smarter choice. With significantly longer trade times, Long Term binary options trades are generally the best choice.