If you are a trader or an avid follower of digital, you must have come across binary options. They are a hot topic among all the digital trading platforms. Many traders use this trading tool or have switched to it because it has so many benefits and trading options.
Despite their fame, many people are still unaware of what binary options are and how they work. They often ask questions about how to trade them, their deposit methods on Quotex, their advantages, and more. This is why, in this article, we will be going over the basics of binary options, so you may have an idea of what they actually are.
How to Trade Binary Options
Binary options are a very simple and easy-to-understand phenomenon. They work on the financial instrument, which allows the trader to predict whether the price of their chosen asset will increase or decrease in the given time frame.
This is the reason why they are called “binary options,” as the trader only has two options to choose from; no other option is available. This is also the reason why they are so simple to trade, but how do you trade them? Let’s look at a few simple steps that you can follow if you want to trade binary options.
Select a Broker
The first thing that you need to do in order to trade binary options is to find a good, trustworthy broker. A broker is a platform through which you will be trading binary options. Most of the time, there are two types of brokers to choose from. One allows you to take high risks, and the others are the ones that want to keep their risks at a minimum.
You should know what your preferences are and then choose a broker according to them. Remember to thoroughly research the broker and only choose a platform that has a good reputation and is trusted by other traders.
Make an Account and Pick an Asset
After choosing a financial instrument, which is a broker, you need to open an account with them. All you require to open an account is a stable internet connection and the information that you would need to provide, such as your name, email address, country name, and more, before opening an account.
After you have done that, activate your account to start trading. Next, you need to choose an asset, such as forex, indices, stocks, or commodities, that you feel most comfortable trading in. Make sure you know the basics about the asset you choose and that you know enough about what’s going on in the world right now and how it affects that asset.
Determine the Closure Time and Sell/Buy the Asset
After choosing an asset, you need to make a contract to start trading. For that, you need to choose an expiry time, which is the time frame till which the prediction of your asset will hold true. At the start, binary options only allowed shorter time frames. However, in recent years, they have allowed traders to select longer time frames.
The next thing you need to do is determine the amount of money you are willing to bet on your prediction. Usually experienced traders only bet 1% to 2% of their total bankroll.
Based on your prediction, you can also buy or sell your asset. Ideally, if you predict that the asset’s price will increase at the end of the timeframe, you buy that asset; if you predict that the asset’s price will decrease after the timeframe, you sell that asset.
Seal the Deal
This is the final step in trading binary options. After you have made the prediction, chosen the timeframe, and decided whether to sell or buy the asset, you need to close the contract. Before sealing the trade, ensure that all the information you have entered is correct.
Advantages of Trading Binary Options
The boom in attraction towards binary options is proof of the many advantages that they offer. Here’s a list of a few of those advantages:
- Binary options have a fixed risk. This means that before placing your bet, you will know how much you will lose or gain at the end of the trade.
- Binary options are very flexible when it comes to trading. They provide a wide array of assets to trade and also offer several leverages to their traders from time to time.
- Binary options are extremely simple to trade. They only work on one fundamental parameter, which is direction. All that a trader needs to do is to predict whether the price of the asset will rise or fall. Plus, they also allow the traders to choose their time frames, allowing them to have more control over their profits or losses.
- Binary options are accessible to all kinds of traders, whether they are beginners, experienced, have a high trading capital or a low trading capital.
- When compared to other forms of trading, binary options offer higher payouts. Most brokers even offer up to 80% of payouts per trade. This is almost impossible in other markets because in order for you to receive such high payouts, you would have to invest a large amount of your bankroll.
Conclusion
Binary options are a fast, easy, and simple way to earn money. They are based on a yes-or-no, up-or-down proposition. All you have to do is predict the direction of the asset in the given time frame to earn profits. No one can stop you from making a lot of money with binary options if you have the right strategy, enough information, and the discipline to stick to it.
