For centuries now, the world of finance was reserved for a select few. But, not anymore! With the introduction of financial trading opportunities like binary options, it’s never been easier to start trading from the comfort of your own home.
So, what is binary options trading? And, how does it work?
In this article, we will provide the basic facts you need to know to start this new form of financial trading.
How To Trade: Steps
The word “binary” literally means: “consisting of two elements.” The name appropriately fits this new trading method because when you place a binary trade, you are actually choosing whether the price of an asset (Stock, Currency, Commodity, or Index) will be higher or lower than its current price when the option expires.
Here are the steps to trading the binary way.
Choose the Asset you wish to trade.
Choose the Expiry Time of the option. You may choose between sixty seconds, a day, a week, or even months down the line.
Enter the amount of cash you would like to invest in the trade. You can place a trade on as little as $1. This makes binary options trading ideal for those just beginning to invest.
Click the green “Call” button, or the red “Put” button, depending on whether you believe the asset price will be higher or lower when the option expires.
Wait for the Option to expire.
Please note, there is no limit to the amount you may wish to invest in a given trade. Many binary options companies will also provide clients with a personal account manager, depending on the amount of cash deposited in your trading account.
Trading with a professional manager can increase the chances of making winning trades. Binary options companies employ financial analysts who analyze companies, and currencies, so as to make smarter investing decisions. After doing the necessary research, it is easier to understand which assets are set to rise or fall based off of the financial news.
Finding Your Trading Events
At this point, we will take a moment to explore some of the events of the financial calendar, which traders across the globe follow closely. Understanding why these events make the markets rise and fall, and knowing which assets will be affected by which events, is crucial for making trades that are in-the-money.
Trading Events: Currencies
Investing.com, for example, includes an economic calendar, which lists all of the events, per day, or per week. The time of the event is listed in the most left-hand column. One column to the right, you will find the flag of the currency affected by the given event. Another column to the right, you will find the level of importance of the event. Each of these events consist of data being released to the public, with each event representing a different measurement. These measurements can include the CPI (the price of an average basket of goods), Nonfarm payrolls (measuring a country’s unemployment), or many other possible measurements which convey to the public the relative strength or weakness of an economy.
Trading Events: Stocks
The “Earnings Calendar,” as opposed to the “Economic Calendar,” reports the important measurements of the health of companies. Earnings reports are usually released 4 times a year by any given major corporation. These reports fill in investors on the revenue which streamed into the company over the course of the quarter. Commonly, statistics which measure the success or failure of a given product (for example, Apple’s iPhone 6), are also included in Earnings Reports.
You may find the date and time which a company will release its earnings by browsing the Yahoo Finance website. This site allows you to simply enter the name of stock you wish to trade, and the computer will automatically pull up the date and time in which the earnings will be released by the company.
Prospering From Trading Events
Once you have found a date and time which match your already existing schedule, you should also research what the financial analysts have said about the asset you wish to trade. Prior to the event, Financial Analysts will provide traders with a “Forecast.” This forecast represents the anticipated number which will be seen on a given data release. If the forecasted number is lower or higher than the “Actual” number released, than the asset may be headed for a price change.
Let’s take Nonfarm payrolls as an example. If the measurement of unemployment is below forecast, then the USD may be set to rise because it means the labor force is more powerful than anticipated, representing a healthier economy. If the opposite is true, and unemployment is higher than anticipated, then the USD may weaken, seeing as investors are bound to lose confidence in an unhealthier economy.
With the introduction of binary options trading, there’s never been a better time to get in on the action of the world of finance. The established and regulated binary companies, like Banc De Binary, even offer personal account managers to clients who wish to learn how to make money from the markets’ highs and lows. By utilizing this new investment method, while planning and trading the right trading events, high profits may be within close reach.