Binary options trading has opened an entire new domain in the trading industry. In binary options trading you don’t actually buy a stock which is the case in the traditional trading style.
Traditional trading styles are generally long term and the profits and losses are small. Binary options trading is very short term and the smallest time period can be just 60 seconds. It is a high risk trading style with the potential of making big profits.
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How to start trading Binary Options
For trading in the binary options market, you need to select a binary options broker and register yourself. A binary options broker is a website which provides a platform for you to trade in the live binary options market. You need to fill in some personal details to register yourself. This process is free of cost and takes just a few minutes of your time.
For trading in the live market you need to deposit money to your broker’s account. The amount should be equal to or greater than the minimum deposit amount of the broker which is generally around USD 200.
If you deposit a higher amount, you can have access to a better membership plan. A high end membership plan comes with better trading features like account manager, trading classes, high priority etc. Each binary options broker has its own set of membership plans, so do take a look at it before adding money to your account.
Trading in the binary options market
Once you are done with this you can start trading. In the trading platform section you will find some options like High or Low, One Touch, 60 Seconds, Boundary etc. These are various modes of trading in binary options.
In High or Low type, you have to predict if the price level of a stock will be higher or lower than the current price level after a pre specified duration of time. For making a trade all you have to do is to select an asset from the assets list offered by your broker, make a prediction and enter the amount you want to invest. It is as simple as that.
In One Touch type you predict if the price level of an asset will touch a pre specified price level within a certain time limit.
60 Seconds trading is the same as High or Low trading except for the fact that the time limit is essentially 60 seconds.
In Boundary trading you have to predict if the price level of an asset will stay within a pre specified lower and higher limit or not within a certain duration of time.
Binary options trading is about making a prediction and not buying the actual stock. But you need accuracy with your predictions. You can’t just make random predictions and hope them to get correct.
This is because the binary options brokers have a little margin. If you win you will make about 75% if the invested amount while losing means you lose all the amount invested. This way you need an accuracy of about 56% just to break even.