Binaries are simple financial products. Option trading allows investors to choose whether or not an asset will go up or down over a prescribed period of time. All returns are stable or fixed and the risk is somewhat low. There is very little ambiguity in trading decisions. Once you purchase an option, you will received a predetermined payout or lose your investment. Little guess work is required in binary option trading.

Trading Platforms

Binary options platforms are graded on their customer service, demo accounts, payouts and minimum deposits. Some of the best platforms are Options XO with a minimum deposit of $100, a payout of 89%, but they do not have a demo account available. Try out Option Bit with a minimum deposit of $200, payout at 81% and demo accounts allowing you to practice trading before you actually invest. MarketsWorld requires only $20 for a first deposit and this platform pays out at 95%. MarketsWorld has a demo account and first deposit bonuses.

Even though binary option trading sounds simple, there are risks and issues you need to know before trading. It is very enticing to begin trading in binaries long before you are educated on market trends and movements.

Trading for Beginners

The most common binary option trading is the basic or vanilla option. Once you have determined what trading platform you will use, click into your account. You will have underlying asset options and the current price of your asset will be listed on the screen. You will be asked to predict if you believe the asset will be higher or lower at a specific future time.

Predicting the price increasing or climbing higher is buying a "call" option. There will be an up arrow on your trading platform screen. On the reverse side, if you feel the price of your asset will be lower, you purchased a "put" option. This is reflected by the down arrow. Future time is the expiry time.

To win the trade and get a return on your investment, the price needs to land where you predicted and at the expiry time. Once you begin your trade you cannot exit until the trading deadline is up. Time limits are quick. You can choose sixty second expiry options up to a full day. Rarely do binary options go beyond an 8-hour period. It is possible to set the expiry time at the beginning of the trade.

If you want to predict a stock price moving up, click the up button and choose the expiry time via a drop down menu. Determine how much money you wish to place on a trade. Enter the dollar total in the "amount" box on the screen and click "buy". Your potential return is immediately listed on your trading screen. If you place a $100 call amount and your return is 180%, at the end of the expiry time, and if you predicted correctly, you will receive $80 + $100. Your return is an $80 profit. Of course, if you predict incorrectly you will lose $100. Rule of thumb: never invest more than you can afford to lose.

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Author's Bio: 

Binary Trader