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Published on March 7th, 2019 | by John Kane

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Binary Options Explained For Beginners

Trading in options are based on the value of underlying assets, such as title to a property, while the property is the underlying assets, while the title is traded, there is no physical possession of the assets. Binary options is a type of option are so called because of the twin (binary) nature of their outcomes; that is 0% or 100%. Also called all or nothing investment, fixed return option (FRO) and digital options. These types of investment are quite easy to understand and engage in. For a beginner, there are several binary option brokers out there, but I would recommend HighLow or Binary Cent as the broker of choice.

Binary Options Returns Explained

With binary options, you are guaranteed up to 85% return on your investments, although, traditionally it pays between 61% – 85%. Though most brokers pay between 70% – 75%. The difference being their commission, as no other commission is charged. The maturity time can be anything from 10 minutes to one month.  For instance if a buyer believes that gold will reach $1,500 an ounce by 14.00 EST, he buys (Call option) if the option materializes, he gains, the gain will depend on the invested amount and the rate being offered by the broker. However, if Gold does not reach $1,500, by the expiry time, he gets nothing. A Put option works in the reverse direction. If the trader believes that Gold will fall to $1,500 by 14.00 EST, he sells. If the expected outcome materializes he gains, if not he loses. The nature of binary option has made people to erroneously refer to it as gambling, because of its Yes or No nature. However, gambling depends on luck and chance, while binary option trade is pure analysis of market fundamentals.

For more basics, I recommend reading our Binary Options 101 page.

Just Starting Out

For a beginner, first you need a PC with an internet connection, a very fast PC and a reliable internet connection will be ideal. Then register with a broker of your choice; brokers can be found on the internet, most brokers offering binary options are under the regulatory oversight of a regulatory authority. It is important to inquire about the regulatory status of your desired broker to avoid being registered with unregistered brokers and the unpleasant consequences it entails. Complete the registration formalities and in no time, you are already trading.

The same goes for binary options software. You always want to end up with a software that is regulated. Systems we’ve had issues with include Binary Robot 365, Option Robot and Binary Option Auto Trading.

Binary options, opportunities exist to trade in stocks such as Apple, Microsoft, Coca-Cola etc.; currency pairs, e.g. AUD/USD, or EUR/JPY, indexes such as Dow Jones, NASDAQ or CAC; or commodities such as copper, gold, oil, and silver.

Binary Options are Easy to Trade

Since it is web based trades, you are presented the opportunity to either trade on the go or to download the software, though this option is broker specific. As the name suggest all or nothing. For instance if you wish to trade copper, you can place a Call option that price of copper will be $4 by 14.00 EST, if it works out, you gain if not its loss. However some brokers give back a certain percent of the investment back as rebate or refund, usually between 10 -15%.

As a form of investment, binary option offer several advantages. For one, the returns are limitless, only very few investments match its rate of return. With 85% return, it becomes easy to increase your wealth. Also, the maturity time is relatively short. From just above 10 minutes to one month; meaning that in just 15 minutes, you can receive great returns on your investment. The market is also open 24/7, unlike other markets that are closed on weekends and public holidays. Besides, weekend trading attracts a far higher yield on investment. However, investments are usually a risky affair, profits are never guaranteed.

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About the Author

I am a full time binary options trader. I was able to leave my job in the last 5 years and dedicate myself to trading fully. I never thought my hobby and passion would make a living for me but I am grateful every day that it has. My main goal now is to communicate with the binary trading community, contribute to different websites and learn from other traders.

Disclaimer: Binary Today would like to remind you that the content contained in this website is not necessarily real-time nor accurate. Past performance does not guarantee future performance, the above is not indicative and is purely for educational purposes only. Relying on the above for investment, trading or betting in binary options or Forex is not advised unless done so with virtual money only.

Binary Today or anyone involved with Binary Today will not accept any liability for loss or damage as a result of reliance on the information including reviews, recommendations, charts, software, income reports and signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.


3 Responses to Binary Options Explained For Beginners

  1. Silver says:

    This article was very helpful. Thanks so much

    • John Kane says:

      My pleasure Silver! We will be producing more content like this in the near future to go over the binary options basics from time to time.

  2. Dawn says:

    Thanks for the binary options beginners post.

    Very helpful!

    The toughest part I have is finding a broker, but I have Nadex going now in the US and they are working well.

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