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How to Trade and Profit from Binary Options

Updated on August 8, 2013

Are you looking for a permanent stream of income? or you are just looking for means of earning some extra dollars to supplement your regular income. Whatever your case, binary options is a likely option you would want to give a try.

Trading binary options is the latest, most profitable way to trade on the global markets and trading that allows you to earn maximum profit in minimum time. The binary options world has opened up the world of financial markets to the entire world and has simplified the once complex world of global finance. With binary options trading, you are finally able to access the world of global finance without having to spend years in university or pay exorbitant fees to a broker whom you do not know. With binary options, you are the trader and you make the decisions. The unique aspect of binary options trading is the fact that you know exactly how much you can earn with binary options.

In this article I will be introducing you to binary option trading. We will start by looking at what binary options are, how to get into trading binary options, a typical trading example and many more.

What Are Binary Options?

Binary Options are simply a way to trade by predicting the direction of the market price of currencies, stocks commodities and indices over a period of time selected by the trader. Binary Options are simple to trade because they can have only two possible outcomes: either the option expires in the money (that is your prediction was right) or out of the money (that is your their prediction was wrong). The potential payout for each outcome is known when entering a trade, making Binary Options ideal for short term trading

So How Do I Trade Binary Options?

The concept of trading in Binary Options is simple. If you think the price of an asset, for Example EUR/USD, will go up during the life of the option, you open a trade on "UP" (also called "CALL"), If on the other hand you think price will rather go down, you open a trade on "DOWN" (also called "PUT")

So you see, trading binary options is that simple and very straightforward. To trade, simply choose an asset that you wish to invest on, for example: a currency pair like EUR/USD. Once you have chosen your asset simply decide with direction you think the market price will go, either up or down. Then simply enter the amount you wish to invest – anywhere from $20 up to $20,000 depending on the trading platform you chose to invest with. Then click the ‘Buy’ button and that’s it – you’ve invested in your first binary option. Also note that when you enter the amount you wish to invest, the amount that you will earn if your investment is successful immediately appears on the screen as you type so you know exactly how much you will earn. No surprises, complete transparency. This is trading binary options you know your risk and your reward before you begin trading.

Before you can start trading binary options however, you need to select a trading platform such Stockpair, 24Option, iOption or any other binary option trading platform of your choice and there are many to select from. Then you need to create an account with the platform of your choice and deposit money into your account. The minimum initial deposit could be anywhere between $200 and $500. Depending on the trading platform you choose. Some trading platforms also offer bonuses for initial deposits and so do not forget to take advantage of any such bonuses available to you.

Binary Option Trading Example

Let’s say, you open a 60 minutes trade of $300 on the EUR/USD predicting the price will go up. The return on this option is 82% if the option expires In the Money (that is if your prediction is correct) and 0% if the option expires Out of the Money (that is if your prediction is wrong).

If the EUR/USD went up, meaning the price of EUR/USD in expiry is higher than the price when you opened the trade, your option expired "In the Money" and your payout is $546, your investment is $300 and $246 is your profit (82% x300). If the EUR/USD went down, your option will expire "Out of the Money" and you will not get a payout.

Have You Traded Binary Options Before?

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