Binary options have been in the news a bit recently, but maybe you are unfamiliar with how they work, still. Despite what some media outlets might say, binaries are really easy to understand and even easier to use. This means that you do not need a lot of experience to effectively use them to create profits for yourself–and this is a very good thing. Furthermore, this type of trading has a lot of benefits that you will not find anywhere else. Let’s look at both the good and bad sides of trading with binaries so you can have a better idea of whether or not this is something you can use to create a profit for yourself.
Short Term Trades
There are a lot of people out there that specialize in short term trading. Many of them are day traders within the stock market, and a few more are currently located within the Forex marketplace. But even these can be considered long term compared to some of the things that you can find with binary options brokers. 60 second option have become very popular, and there are even a few brokers out there that offer 30 second options now. The good news is that you don’t need the major moves that stocks and spot currency traders need to have a worthwhile profit. A single penny (or less) of movement in the right direction can give you a big rate of return. The Forex market has done a lot for bettering the return on short term trades by allowing small traders to use large amount of leverage while trading currency pairs, but the rates are still pretty low because they are dependent upon the actual asset’s rate of change. Binaries surpass this need and are not rate dependent, but direction dependent. This allows for bigger profit rates with smaller changes in price.
One of the toughest parts about trading is that there are so many variables. Binary options can cut down on this a tiny bit. For one, you don’t need to worry about when to exit a trade once the trade is begun. This is taken care of for you. For example, if you start a trade and it has an expiry 15 minutes from then, you don’t need to do anything for 15 minutes. There are a select few brokers that offer early surrender of your option, but the vast majority of the time (more than 97 percent), this is not a good idea, and that fraction of the time that it is a good idea, it should only be utilized by only the most advanced traders that have been able to run some sort of risk assessment on what they’re doing.
This might seem like a lack of freedom. In a way, it is, but it also eliminates one of your toughest choices. You still have to decide which expiry time to choose, but now you are not doing it in the heat of the moment. It’s a decision that you make in a final capacity before you begin a trade.
This is important because we tend to make poor decisions when the stakes are higher. We react emotionally when there is a lot of money at stake, so being able to decide before that risk exists helps cut down on your error rate. This “lack of freedom,” then, actually gives you more control over the outcome of your trade results. In a skilled traders set of tools, this equals higher profits.
Not So Different…
Binary options are a revolutionary type of trading, but to create success, they rely on the same things as every other type of short term trading does. You still need to have a mastery of technical indicators. Understanding charts, especially candlestick charts, will improve your results and cut down on your prep time for each trade. More successful trades per day equals more profits. Nowhere is this more true than in the world of binary options trading. You still need to be attentive to the news, since this can have a profound and immediate impact upon any type of asset. Short term trading is usually sensitive to tiny changes, and these things are very sensitive to picking these up. You also need to be aware of other types of analysis, too. Fundamental analysis is best at this, and although people usually reserve this for long term change prediction, the long term needs to start somewhere, and when the long term does start, it always affects short term changes, too. If you are able to look at these things and have a good idea of how they will affect the change in an asset’s price, then you will be great at binary trading, regardless of whether you are trading stocks, indices, currencies, or commodities.