Binary option trading has come to the forefront as an interesting and entertaining trading way bringing high returns on small investments and benefiting all, in particular with the day traders.
As much as we understand, binary is a term related to computer meaning two, or zero and one. In a similar way when we apply this to trading, binary option is a trading contract which has only two consequences, zero or one, we can say also all or nothing.
To explain it in a simple way binary option trading is a contract which, on the implementation of a certain condition or price movement, disburses to the trader a set fixed amount depending on whether his contract ends “in the money” and should receive the disbursement or ends “out of money”, where he does not receive anything at the time of expiration.
To make money with binary option trading is of course risky, there are risks in every form of trading. Differently from other trading instruments the consequence in a binary option trade can be affected by outside environment and those in the trade. Additionally the result in a binary option trade is forecasted in accordance with the circumstances prevailing at the time of the accomplishment of the trade.
The most appealing aspect of making money with binary option is that you don’t have to forecast the correct price or be right by the exact price. In case you are right by even a cent, you are successful , which equals to being right by $100. Thus how to earn money with binary option is showed below:
Choose The Most Liquid Securities to Trade on
It is certain that binary option is easier to trade and far less complex comparing to Forex. To make an investment in Binary Option generally involves only two simple investment choices:
• In / Out – This is often called Boundary. An investor has to decide whether or not the price at the end of the contract expiration will be in or out of a range of price
• Touch / No Touch – Whether or not a price will reach (touch) a predetermined price at the end of the contract expiration.
• High / Low – Whether or not the price will be higher or lower than a set price at the contract expiration.
Trade for The Opposite in Case The Market Has Already Increased
A reason of the growing mass attraction of Binary Option is the fact that when you trade in Binary Option you take part in a contract – with a set contract length and a payment. In Forex, you do not have these features, so there is no real way of determining when to “cash in” and what you will receive.
Binary Option provides the investor the information of exactly when the contract expires and what they will get if they are “in-the-money“. Contract period may be anything from a few minutes to a week and the payouts can reach to 93%.
Quality is Less Important Than Quantity
If you want to earn money with binary option trading, you should value quantity over quality. This means that you can make use of the retail investors’ over aggressive actions that move the market. Binary option trading is much more beneficial with quantity rather than quality since the investors do not have to be concerned about the size of the price movement, they only have to catch its direction.
Hedging With Binary Option
This is one of the simplest and easiest methods of earning money with binary option. This means that in case there is a particular price movement that is in your favor prior to the time of expiration, you should either partially or fully hedge your contract. This hedging would at least lock in the current returns.
These are the methods by which you are able to earn money with binary option. We will look at the benefits now that binary option trading provides in regard to trading.
Advantages of Binary Option Trading
• High returns: The popularity of binary option trading is growing rapidly for the fact that a successful trade could bring up to 75% return whereas an unfortunate one would cost the trader only 15% of the original investment. Additionally trading with binary option can be performed with small initial investments.
• Fast turnover: Fast turnover of a binary option trade is another appeal that draws the investors towards this method of trading. The binary option trading has hourly or most commonly daily expirations . So it means that the investment payout is executed within the day and you do not have to wait for the payout for weeks, months or years for your profits on investments.
• Recognised securities to trade: though there are not many securities available for binary option trading, these are recognised and highly liquid like Google, US Dollar / Yen, NASDAQ Index and Microsoft.
• Very advantegous for small cap investments: Another great feature of binary option trading is that there are not many obstacles to enter the market. You are able to open an account with as low as $100 and begin trading.
It is certain that the standard form of binary option trading is quite advantageous for investors. In addition to these standard vanilla options, there are particular exotic options as well which have more complicated aspects than the standard options. They are options that have a particular clause added and on the execution of the clause, the option is activated, else it is valueless. But binary option is being used to earn money with the exotic options too.
Because of these binary option trading is proving rather beneficial and now with the beginning of online trading, binary option trading can be used in online trading too.