Get to Know Binary Options
Binary Options Attract Worldwide Attention
Recently, a financial instrument attracts people’s attention for its simplicity as those who do not have any investment experiences can also trade at ease. Investment is always accompanied with risks. However, there is an investment where it is easy to hedge the risks and make high profits. That is binary options.
Compared with other complex financial instruments, binary options are characterized by their simple trading rules. For those traders who have little experience in investment, it is also possible for them to make high profits after learning the trading strategies and tips.
In addition, when we heard of investment, we usually have the impression that a large amount of money is needed in order to get started. However, it is possible to trade binary options with a small amount of money. The minimum trading limits are different depending on the brokers and it is possible to trade with a minimum trading amount of $5.
However, if you think that investment is accompanied with risks and place the trades like a game, there is a good chance that you will lose your investment. Therefore, in order to minimize the risks, we invite you to take a look at our website and learn all the basics of binary options, trading strategies, and risk hedging.
At first, it is not necessary to remember all those difficult trading strategies and analytical methods. The first step is to fully understand what binary options are.
The Reasons Why Binary Options are Appropriate for Novice Traders
As it is shown in the above figure, in trading binary options, there are only two options available for a trader to choose from. A trader predicts whether the current price will go up or down at the time of expiration.
Besides this type of binary options trading where a trader predicts whether the price will rise or fall, there are also other types of binary options available for trading. In all types of binary options, a trader predicts in one of two directions of the market. Therefore, it is possible to have a winning percentage above 50% by using the trading strategies.
To think that, for those traders who have little knowledge of investing, they can have a winning percentage above 50% as it is just to predict in one of two directions, it is thus possible for novice traders to trade binary options at ease.
In addition, unlike foreign exchange margin trading, there are no risk of Loss of Principal and no additional margin in binary options trading. Different from the traditional investment style that “only a number of traders can make large profits”, binary options are said to be a new form of trading style.
Binary Options Trading is Like a High/Low Card Game
If you cannot grasp the characteristics of binary options, you can firstly imagine that they are High/Low card games. High/Low is a game that a player guesses whether the next card will be higher or lower than the previous card.
For example, the value of a card is 10. A player guesses if the value of the next card will be higher or lower than 10.
In this case, there are three cards for which the values are higher than 10 and they are: J, Q and K. Take into consideration the probability theory, the value of the next card will be lower than 10 in most cases. Most people will choose “Low” and it is viewed as a correct judgment. The players simply consider which one has a higher probability of winning and it is such a simple card game that a child can also play.
Now, let’s compare binary options to card games. Since they are very similar to each other, it is much easier to compare trading forex and stocks to playing High/Low card games, which will make it easier to understand.
“Will the EUR/USD close higher or lower than the current price in 15 minutes?”
Let’s assume that EUR/USD is currently trading at 1.14000. You predict whether the price will be above 1.14001 or below 1.13999 in 15 minutes. If you expect that the price will rise, you choose the “High”. On the other hand, if you expect that the price will fall, you choose the “Low”.
Surely binary options are different from card games as they are the type of investment that requires a trader to possess investment knowledge and trading strategies. The basic principles are the same: a trader predicts whether the current price will go up or down at the time of expiration. There is not a big difference between binary options and High/Low card games.
If you master the basic principles, it is not difficult to understand binary options trading. For those who do not have any experience in investing, now it is time to get started by trading binary options.
Getting Started with Binary Options
In order to get started with binary options, firstly, you need to open an account with an online broker. If you want to trade binary options on multiple platforms, you will need to open an account with each of these brokers since there is not a joint account.
Since the assets, trading rules and characteristics of brokers are different from each other, in order to choose the broker that is the best fit for you, it is necessary to take into consideration the purpose of use.
In addition, even though most of brokers do not require you to submit identity documents when you open an account, there are still some brokers requiring these documents and you will need to submit them in order to open an account. Therefore, it is important to make sure that you read all the requirements and user policy in advance.
Most Popular Binary Options Brokers for Beginners
*Investors can lose all their capital by trading binary options.