Binary Options Trading Basics

When you choose to trade in binary options you will quickly realise that every trade is time controlled.  In fact, deciding a time limit is part of the purchasing sequence.  A trade can last just sixty seconds, or it can be several hours long; the rewards may vary according to the length of the trade although there are a variety of other factors which will need to be taken into consideration.  The decision will probably be made based on the time you have available and whether you mind waiting for your results or not.  If you enjoy the thrill of watching the price move you may find shorter trades are more appealing.

Whichever option you choose it is essential to remember that, whilst you can choose almost any duration, as soon as you have chosen and committed to the trade the deal is locked.  You cannot then extend or shorten your trade in order to get the right result.  This is one of the biggest differences between binary options trading and regular trading.  If you buy and sell shares you can do so at any point, depending upon market conditions and the current price of the shares.  However, with binary options you are not purchasing a share; you are simply purchasing an option; there are only two basic choices; the price will either go up, or down.  This is known as the call/put trade; it is the simplest option and the best one to start with.

There are in fact three binary options, the call/put as described above, and the following two:

The one touch trade is controlled by a broker.  They will select a price for a specific share and a time limit.  If you agree to the trade you will receive a return if the share prices rises to the set level.  It does not matter if it goes over that level as long as it reaches it.  The harder it is to reach the target price, the higher the reward is likely to be.

The third and final option is the boundary trade; in this option you can choose whether the share price will end up within a specific price range or not.  If, at the end of the trade it is in the same place you predicted then you will get the agreed rate of return.

Deciding which option is right for you will depend upon your current level of trade experience.  If you are new to the markets the basic put/call trade may be the best option; to assist you with learning how share prices move.  Alternatively, if you are already experienced in trading on the stock market and are looking for a little diversity you may wish to dabble in all three types of trade.  There is no right or wrong options; just the one that suits you and your current position best.

The quality of your trades is much more important than the number of them.  Whether your goal is to earn a living from binary options trading or you are just looking for a little extra will make a big difference to the amount of risk you are prepared to accept.  Everyone is different and you will need to develop at least one of your own binary options strategies to reach your own goals.  It is essential to note that you cannot win every trade; you must factor this into your calculations and risk only what you can afford to lose.

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