How to Start Trading Binary Options
How do you Start Trading Binary Options?
Firstly you need to sign up with a Broker or trading platform and make an initial deposit. Read “How to Choose a Binary Options Broker” to familiarise yourself with what to look for in a good platform and the pitfalls to avoid.
Once you are signed up request access to the demo system and play around with it to gain familiarity with the user interface and the concept of trading Binary Options. This will give you an insight to how the system works.
You now need to decide on which assets to trade on. The current choices are:
- Stocks (Apple, IBM, GE, Facebook etc)
- Commodities (Gold, Silver, Oil etc)
- Indices (FTSE100, DAX, NASDAQ etc)
- Currency Pairs (GBP/USD, EUR/USD, GBP/EUR etc)
When you have chosen your asset you need to decide whether to choose a CALL or a PUT on that asset.
- A CALL option is when you think that at the time of the contract expires, the asset will end higher than at the time when you opened the trade
- A PUT option is when you think that at the time the contract expires, the asset will end lower than the time when you opened the trade
To start, trade with small amounts and in an asset you are familiar with if possible. If you are not familiar with any asset choose a common well know asset as you are more likely to find analysis, discussion and reports online more easily. Carry out some research on the asset to see if there are any news updates or historical factors that may influence the movement of the asset price one way or the other.
The golden rule is never trade more than you can afford to lose. Many traders have a rule of thumb not to trade any more than 5% of their total capital on any one trade.
You will also be faced with the decision of which type of option to trade. To start with trade the UP/DOWN option.
TYPES OF OPTIONS
The most common type of option is the UP/DOWN option like the one discussed above. You simply need to the option to finish higher if you placed a CALL or lower if you placed a PUT.
The best time to use this type of option is in a trending market.
Another common type is ONE TOUCH or NO TOUCH option. With ONE TOUCH you predict that the price will reach a particular level but may not sustain that level. All you need is for the price to touch that level before the option expires, it doesn’t matter what happens after the level is reached, the price may fall again and you still win. The opposite is the case for a NO TOUCH option, you get paid if the price does not reach a predefined level before the option expires.
Use a ONE TOUCH if you believe a level will be reached but you don’t believe that the price will remain above/below that level. A NO TOUCH option is best used in a quiet market.