Binary options trading has become quite popular over the past few years, as many are drawn to the ability to trade the markets without the need to actually purchase any assets. The basic trade requires only that you decide whether you feel that the price of a single asset is going to be higher or lower than the entry price at the time the trade expires. All trades are bound to an expiry time and all offer only two outcomes once that time period completes – profit or loss. Only a correct price movement prediction is going to yield a profitable outcome, so let’s consider the two available options.
The basic binary options trade is one in which you must decide if the price of an asset is going to go up or down. Put is used for the prediction of a price decrease. Call is used for the prediction of a price increase. One of these two must be selected in order to execute a trade. Additional necessary selections include an expiry time, investment amount, and the asset itself. All of these selections will need to be made within the platform of the broker that you have chosen. Within most platforms you’ll be selecting between Put and Call, but some platforms simply ask you to select between Up or Down, or Over or Under. Regardless of the label, the process remains the same.
So, how does one decide between the two? The answer to that question is analysis. Current market news is extremely helpful in pointing out key trade opportunities. These reports are not difficult to decipher, pointing directly to assets that are trending upward or downward at the time. Armed with this information, you’re next move would be to visit your binary options platform and see if there are opportunities for those assets are available. Most brokers provide an asset index that consists of at least fifty different assets, with some brokers providing two-hundred or more assets for you to choose from.
Part of the appeal of binary options trading is the transparency that is provided. Prior to each trade, you will be presented with the prospective profit amount should the trade finish in the money. Any loss amount on a trade is capped, being limited to only the investment sum that you committed to the trade. Most binary options brokers do have minimum investment amounts in place, but these can be as low as a single dollar, depending on which broker you choose to trade with. For the basic Put or Call trade, expect to find minimums in the $5 to $20 range.
As simple as this form of trading may sound, there is work involved. With only two choices to select from, traders do have a 50/50 chance of earning money even if they do not complete any analysis. However, simply guessing is similar to gambling and is not advisable. Only with strong analysis skills do binary options traders stand to generate sizable profits. Learning how to correctly evaluate market conditions in advance of trading live within a platform is highly advisable.