Those who make the decision to trade binary options will find that the process of doing so is quite simple. Market analysis will need to be completed, after which actual trade execution will take less than one minute. There are a few things to consider before getting started, but once a trader has taken care of these basics, trading can commence immediately. It is not uncommon for traders to enter into their first trade in an hour or less.
A broker will be needed, so broker selection will be the first step. There are plenty to choose from, which is a good thing, as competition between them means that each is always working to provide new extras that will appeal to prospective clients. The selection process should include an evaluation of what each provides, along with a consideration of whether they are able to meet your needs. Personal preferences can, and should be considered.
Specific considerations should include whether or not the broker is generally viewed as a reliable choice (not all are), the minimum deposit amount, banking methods provided, minimum investment amounts, and the overall trade variety provided within the platform. The platform itself is also important. It should be easy to use, be easy to navigate, and allow for the fast execution of trades. Bonus offers may also factor into the decision, but since these come with specific requirements for withdrawal, not everyone will want to accept these offers.
Trade selection often starts with the selection of an asset. There are two ways to go about this. One would be simply select an asset and then start the analysis process. The other would be to scan recent market reports, selecting an asset that is being impacted by news. It is not at all uncommon for market news to point out the best investment opportunities. When investor sentiment is strong, prices are likely to trend in a single direction. These trends can then be taken advantage of within your binary options platform.
With the underlying asset chosen, analysis will be the next step. For the basic trade type, the goal will be to determine whether the price is climbing or falling. When a trend is in place, this determination will be easy to make. On a price chart, a trend will be shown as an upward or downward moving line. All brokers will provide a basic price chart that will show the most current movement, along with past movement for some period of time. How much past movement is shown will vary from broker to broker.
Within most platforms, this basic trade is referred to as Put/Call. Put will be the selection for downward price movement, while Call will be the selection for upward price movement. These trades can also be referred to as Up/Down, High/Low, Above/Below, and more. This should not cause confusion though, as they all function in the same manner. The goal with each is to determine whether the price will be higher or lower than the strike price when the trade closes.
Every trade, regardless of type, is bound by an expiration time. There contract opens when the trade is made, and will close at the time selected by the trader. Expiry times can vary greatly, ranging from a single minute (or less) up to a year. Each binary options broker will decide which expiry times they will offer. Ideally, you’ll want to have access to short, mid, and long-range expiration times. The goal is to have access to an appropriate time period for each type of price movement.
To recap, the steps to trade are:
- Select an asset.
- Select an expiry time.
- Select the price movement prediction.
- Enter an investment amount.
- Verify these selections and submit the trade.
The outcome of each trade will not be known until the contract time expires. If the selected movement direction was correct, the trade will finish in the money. If not, the trade finishes out of the money. Some brokers do offer small refunds on losing trades, so choose a broker that does offer this if it is important to you. Note, however, that those who offer refunds tend to offer lower overall return rates to help offset the cost of offering refunds.
There will be various other instruments to consider once the basics have been mastered. All will be centered on a prediction of price movement, but each functions in a different manner. First-time traders will do well to start with the standard Put/Call trade and then move on to other instrument types at a later point. A slow and steady approach works well when getting started. The binary options platform will be there, so take your time and get off to the best possible start.