If you are starting trading binary options, there are several things you need to know. Trading binary options are different from other trading methods because it involves forecasting and betting on the price movements of assets.
Asides from knowing the importance of an online brokerage like https://www.binaryoptions.com/online-brokers/fbs/, you need to know the different ways you can trade binary options. By now, you should already know that binary means 0 or 1, i.e., trading two options: a well-defined amount of none at all. It is about dealing with high-reward, high-risk situations per time.
What are binary options?
Binary options are a popular high-risk financial tool that involves pre-defining the risks, rewards, and time frames. This money-making venture is based primarily on a ‘yes or no proposition. If the time frame of a binary option expires, you will get paid; but you lose money if the binary option expires out of money.
As a binary options trader, your primary goal is to do your best to guess whether or not the asset price will go higher/lower than the strike price. Of course, the right decision significantly determines the winning score. But the returns are usually large, ranging from 70 percent to 90 percent. However, losing returns is generally from 0 to 15 percent.
Why you should know the different binary options trading methods
You can trade binary options in different ways. As a new trader, you shouldn’t shy away from learning new things about trading binary options. However, you should only strive to learn about the most relevant areas of binary options.
Here are the advantages of knowing the different ways of binary options trading:
- It puts you on the right path to becoming a professional binary options trader
- It helps you learn how to adapt to market fluctuations
- You have the potential to make lots of profit the more you know about the accessible number of binary options
- You understand your strengths and how to capitalize on them, trade-wise
- You increase your abilities and knowledge base.
As you can see, the benefits of knowing these crucial things about binary options are unquantifiable. So, head to the next section to discover the seven ways of trading binary options.
Seven ways to trade binary options
Here’s a brief rundown of the seven ways of trading binary options:
The high/low method of trading binary options forces a trader to readily consider whether or not the chosen traded asset will eventually fall or rise in value above or below the predetermined announced value.
The period when your prediction is set to occur – also known as the expiration date – is highly critical. Remember that the payoff for every trade is pre-determined in advance when trading binary options, and everything is always visible to you.
In most situations, you can easily sell the option for partial refunds at any period it expires. You should note that the average reward for trading binary options successfully is approximately 70 percent to 80 percent of your initial investment.
Pairs binary options trading has been in existence for a long time. A particular broker allegedly tried this trading method and made a considerable profit. Since then, it has become one of the most popular forms of trading binary options.
60 seconds-short/long term
The seconds/short-term 60-second trades have significantly grown in popularity in recent months. They are also as popular as the one-touch and high/low transactions. As a result, you will find them with nearly every binary options broker or provider these days.
These binary options trades function precisely the same way as standard high/low trading methods mentioned earlier. However, this activity lasts only 60 seconds, i.e., one minute.
This is perhaps the most popular form of trading binary options that most traders love. It shares remarkable similarities with the high/low binary options trading method discussed earlier.
However, irrespective of the phrase you come across within this industry, the definition, and the philosophy behind trading binary options, remain the same.
Boundary trades – also referred to as range trades – entail trading binary options in a channel. The concept of a channel – which deals with the separation of price ranges – is part of the technical analysis you need to master as you learn how to trade binary options.
Resistance and support determine both the lower and upper bounds. Price will always test these limitations, at least for the most part. But you should always stay within them, although it will finally break through and enter a new range.
The ladder trading method is a comparatively new invention. Many binary options sites showcase several intricate deals in which they have built up something known as an ‘interval’ with multiple strike prices.
Ladder trading allows a trader to benefit from trades – to some extent – that is anticipated to face considerable resistance and support. Several distinct expiry prices exist along the way. The trader can choose both the expiry times and striking prices.
The one/no-touch binary options only pay out your profit as soon as the price of your chosen underlying asset crosses a pre-defined or pre-determined threshold. This is known as a ‘trigger.’
When you hit this ‘trigger’ level, you will be capable of quickly determining whether or not you make a profit.
The no-touch method of trading binary options is the polar opposite of the popular one-touch way of trading binary options. This method enables you to decide whether or not the underlying asset will be incapable of reaching a particular value level.
If you have successfully found a regulated broker, the next step is to choose a binary options method. You can test any of the methods outlined above to figure out which one you are very good at, then double down until you make good profits.