How to Trade Options

Binary options trading is a new trading style which has revolutionized the entire trading scenario. Anyone can start trading binary options by opening a binary options trading account and depositing some money. Before starting you should clearly understand how to trade options.

How to trade options guide

In order to start trading in the live binary options market, you need to follow these steps:

  1. Chose a binary options broker.
  2. Chose an option type (see below)
  3. Chose an asset
  4. Make your prediction
  5. Enter the amount
  6. Select the expiry time and wait.

That’s it!

Continue reading below the table…

Types of Binary Options

You will find various types of binary trading options. A compact summary of all the trading types is given here and this will help you understand how to trade options of different kinds.

High/Low options: In High/Low trading type you have to predict if the price level of a particular asset will be higher or lower than the current price level after a certain period of time. A percentage number corresponding to the asset indicates the potential output. To trade the High/Low option, you need to select an asset, make the prediction, enter the amount you wish to invest and select the expiry time.

Let us assume that Google price level is currently at 833.200 and you feel like the price level of Google will fall in the next hour. Let us also assume that the potential payout is 75% and you are willing to invest $100. To trade this prediction, you have to select Google, select the Down or Put option, set the expiry time one hour ahead of the current time and enter $100 in the amount section.

If after an hour the price level of Google is above 833.200 you will lose $100 but if it is below 833.200, you will win $75 as a profit because your prediction turned out to be correct.

Touch Options: Touch trading goes on for a week and has a very high potential payout which can be as high as 500%. In touch option your binary options broker will specify a price level of an asset which can be higher or lower than the current price level. You have to predict if the price level will touch that limit. You can invest money only on the prediction that the price level will touch the pre-specified limit.

If there is a strong movement towards the specified price level and you feel that the limit will be touched you can make an investment. For this you need to select the asset and enter the number of units you want to invest. One unit is generally equal to $25. If the price level is touched even once during that entire week you will win the investment.

Boundary options: In boundary trading two limits are defined by your broker- an upper limit and a lower limit. You have to predict if the price level will stay within the limits or go out of the limits during the pre-defined time interval. The smallest time period is generally 30 minutes for this option.

60 seconds options: This is a short duration trading type which is exactly same as the High or Low option. The only difference is in the time period which is essentially one minute in this case.

Now that you have understood how to trade options of different types you can start trading in the live market.