Over the years, there has been an increase in the number of people that have taken a keen interest in binary options trading. Informationen zu BDSwiss can help you choose the right binary options broker. However, there are some that have gone into binary trading without really understanding what it is that they are doing. This article is meant to explain major concepts in this type of trading.
Definition of Binary Options
Binary options operate based on a simple proposition of “yes” or “no” as to whether the underlying market asset price is going to be more than the specified price in a given time frame. Options traders will have to look at the market and place their trade bids based on what they believe it is a “yes” or “no” answer.
Binary options are the simplest to trade among all financial assets. It is because of this simplicity that many newcomers and traders have been drawn into options trading. As simple as it may be, it is crucial that one understands how binary options work to be able to trade safely and profitably.
What is Binary Options Trading?
Binary stands for the fact that this type of trade has two options; “Put” or “Call’. Binary options trading gives the trader two investment options for them to predict and choose from. The “Call”option is chosen when the trader predicts that the price of the market asset being traded will rise. If the trader thinks that the price of the asset will drop, they choose the “Put” option.
Binary options trading assets
There are very many market assets that you can make a binary investment in. Choosing the right asset for your trading purposes should be the first step in your trading plan. It is, therefore, essential that you choose an asset that you are very familiar with and can make informed investment decisions about. For example, if your asset of choice is gold, make sure you have all the relevant information about gold prices before making a binary prediction about how the asset’s price may fluctuate.
All the assets that one can trade in binary options fall into one of the following categories:
- Forex: – a combination of pairs of major world currencies like GBP, EUR, USD, AUD, JPY, and many more.
- Commodities: – examples include coffee, silver, corn, gold, and many others.
- Indices: – examples are FTSE, Nasdaq, Nikkei, and Dow Jones among others.
- Stocks: – this involves trading in shares of major companies around the globe. Companies such as Coca-Cola, Deutsche Bank, Google, and many more.
Learning To Trade
If you are interested in learning binary options trading, you should find a good broker. Most brokers will give you a demo account for free so that you can practice trading on a “dummy” account. When you get comfortable trading, you can open a real trading account and start actual binary options trading.