Your Guide to Binary Options Trading Success

Binary options, also known as 'fixed return options', 'digital options' and 'all or nothing options', a reliable form of trading for the novice trader? Or a form of online trading that investors should avoid? In this article, we will uncover how binary options trading came about, exactly how they work, whether their growing popularity indicates an opportunity or a growing tragedy, what steps are there for new traders wishing to make large profits and, very importantly, where's this industry heading to?

The Background Story

Although many claim binary options is a rather new phenomena that started in 2008, in reality the history of binary options trading dates back to 1973, where the newly established Chicago Board of Exchange (CBOE) started options trading on financial instruments.

However, their rise to fame only occurred when they were introduced in 2008 on CBOE as publicly tradable assets. Following on from this, the Securities and Exchange Commission (SEC) officially accepted the recommendations of the OCC and legalised trading in binary options, which were offered by major exchanges.

This, unfortunately, proved to be somewhat restrictive and troublesome and, coupled with the fact that we were witnessing sophisticated technological advancements, helped to pave the way for non-exchange traded binary options.

This newer and simpler form of trading offered by binary options brokers, such as Banc de Binary, who have invested their capital in helping to create state of the art online trading platforms, allow users to trade hundreds of underlying assets.

How They Work

The way binary options work is very simple, adding to its popularity. Here's how you would start making online trades:

Step 1

You would begin by analysing ready made charts available for you to help spot trends of different assets, such as the Apple stock.

Step 2

If, after looking at a chart, you identify a pattern, then you can quickly profit from this trend by investing a specific amount of money for a pre-determined return (payout).

For example, if your analysis indicates that the Apple stock is going to go up in the next 10 minutes, your trading platform will display the return you can gain if your prediction is correct, which is 72% in this scenario.

Step 3

You start by selecting the Apple stock, you input an investment amount of your choice, i.e. $100, you then input the expiry time of your choice - most brokers offer from 60 second trades to monthly/end of the year trades, let's say in this situation, you input 10 minutes and, finally, click on 'Up' (also known as 'Call'), depending on your binary options broker. Alternatively, if you predict that the Apple stock will go down in price, then you click on ‘Down(also known as ‘Put’).

Step 4

If, once the 10 minutes have expired, the price of the Apple stock has in fact increased in value, you will instantly be rewarded if you correctly forecasted this trend.

A Reliable Form of Trading?

Those wishing to embark in binary options, should take a moment to understand whether their money is safe when depositing funds with different binary options brokers.

First and foremost, you should never deposit your money with unregulated brokers. If you do, then expect to have problems, such as issues with withdrawing funds, lack of customer support and slow trading platforms that get stuck during critical trading moments, to just name a few.

Beware, you should only sign up to regulated brokers, most trusted EU brokers must be CYSEC regulated.

Simply read our article on Binary Options Brokers to know exactly which regulated binary options platform you should join. This step will help prevent you from ever being exposed to binary options trading scams.

Secondly, the potential to earn high returns in binary options trading should also indicate to you that there's a serious risk involved that you could lose all your investment.

To prevent being left with a bank balance that has a big fat zero, remember that information equals success in trading. Unfortunately, some novice traders mistakenly assume that the ease of trading in binary options can compensate for lack of knowledge - not true.

Don't make the same mistakes, start by developing the necessary foundation needed to become a successful binary options trader by visiting our binary options strategy page, where you will learn the 'Top 5 Binary Options Strategies' traders use to make money, and the '5 Minute Binary Options Strategy' that is often used to generate quick returns.

Furthermore, it may be useful to join forums and attend online seminars for beginners, as this will give you the insights needed to execute successful investment decisions.

Unlike gambling, binary options trading offers a unique opportunity where savvy investors can quickly profit by taking advantage of all the tools, charts and information that's made available to them. For this reason, some traders who have learnt how to fully utilise everything that's on offer, and who possess a good instinct about which way the markets will go, can continually make large sums of money by correctly forecasting the movement of various assets.

Finally, there are over 100 binary options brokers currently competing for your attention and, if you're at all unsure what this exactly means for you, then let it be known that where there is competition, there is innovation and unparalleled service. Today, traders can expect exclusive account managers that assist you with all aspects of trading, from risk management to learning key strategies that have been proven to deliver results.

Making the Right Investment Choices

Prior to executing a successful trade, traders have to review a significant amount of information. This can at times be time consuming and challenging, as not everything you read is necessarily useful or influential.

Image of a trader reflecting on binary options.

To help traders overcome these problems, investors increase the amount of money they can potentially earn on investments by using binary options signals. These are basically personally tailored software programs (similar to a trading robot) that deliver trading signals to help you make the right moves.

Be warned, some binary options signal providers claim that their automated robotic systems can generate unrealistic returns of around 80% to 90%. If you see a signal provider making these claims, your alarm bells should be ringing, as no system can achieve these gains.

Nonetheless, there are some signal providers which professional investors claim have up to 60% to 70% accuracy.

If you're wondering: 'How exactly do these Binary Options Signals help you with binary options trading?'

The answer is through emails, instant messages, sms and via any other useful form of communication to inform you about the type of asset you should be looking at, its current trend, its price, and the exact time it will expire.

Despite the fact that this information is invaluable, some people argue that since the market is so time sensitive, any delay in communication between the signals provider and the trader, can be very harmful. For this reason, you must ensure that you have set-up a fast and effective process for receiving messages on time.

Onwards and Upwards

If binary options is new to you, then it is important for you to understand what the future holds for this exciting and growing market.

In just five years, binary options trading has managed to secure a reputation as being one of the most popular methods of online trading. In order to grasp the reasons behind this success, you have to remember that as humans we continually seek new and interesting ways to test ourselves and get our bloods rushing with excitement and adrenalin. The potential to experience such rapid risks and rewards by merely speculating on the direction of a large variety of assets, has allowed binary options to give investors a trading experience unique to any other form of trading.

Research conducted on OptionsBee members reveals exactly why binary options is so popular amongst traders:

  • Unlike investing in the stock market, where you are unsure what the value of your stock will be after a certain period, binary options give you the exact possible returns you can make from correctly predicting the outcome of an asset after a specific time, and the exact loss you can incur if you get it wrong.

  • We can quickly benefit from market data. For example, if we hear that Saudi Arabia is cutting the production of oil, we can instantly profit from this news by predicting that the price of oil is going to go down.

  • You can trade currencies, stocks, commodities and indices all under one trading platform.

  • By offering short expiry options, such as 30 seconds or 5 minutes, they cater to aggressive traders who want to try their fortune in making money fast. On the other hand, you can opt for monthly or even end of the year expiry, if you are a long term trader.

Where is this Industry Heading To?

Similar to making investment decisions where we have to take into account historical data, we can at times also predict the future based on the past. Binary options started in 2008 with just a few binary options brokers and, today, we over a hundred brokers operating online. The first internet based futures exchange, HedgeStreet, was launched in 2004. It allowed traders to hedge against or speculate on market conditions and price fluctuations. This company was founded to help provide a service to a rising number of individuals making private investments in assets.

Going forward, and based on what we understand from the history of any competitive industry, consumers will ultimately continue to benefit with even greater options and levels of technological advancements. Trading platforms will offer more trading choices, appealing to a wider variety of traders. Social elements will be implemented, where traders can share their knowledge, make joint trades hence spreading the element of risk and reward, and have features installed where they can easily follow the moves of successful traders.

To learn more about what steps you need to take to become successful in binary options trading, then take advantage of all the free resources available at OptionsBee.

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