Trading Strategy: Binary Options
Binary options offer a simple way to trade finances in global markets. An understanding of binary options is crucial to a trader’s knowledge of modern financial products.
Binary options are traded on a ‘yes’ or ‘no’ proposition. Traders invest their money in the trade based on how they read market trends. For instance, if a trader believes that price of an asset will rise to a given value at a particular time and this turns out to be true, the trader gains. If the proposition turns out to be false, then the trader loses. Most traders engage in high-low trading option, which is the most common form of binary options. This type of trading gives traders entry to equities trading, Forex trade, indices and commodities among others. Since a binary option has an expiry date or strike price, traders call it a fixed return option.
If a trader correctly predicts the market’s direction and the option lands on the right side of the strike price, he or she gets a fixed return regardless of the instruments moved. For a trader who trades wrongly on the market’s direction, he or she is likely to forfeit his or her initial investment only.
To have a better insight on how to explore the market, a trader may need to invest in the services of a company specialized this area. Many companies exist but only a few can offer qualitative training that enables a trader to garner the right skills to face the market with confidence. Rockwell Trading is one such company that offers trading strategies that many traders have found useful.
Founded by Markus Heitkoetter in 2002, the company has been offering effective trading strategies with a goal to streamline the intricate world of trading by helping traders to achieve their goals. Rockwell does this in many ways: it delivers powerful and unique trading strategies that traders can understand and execute easily. With stop loss strategies of between $100 and $200, even new traders and those with smaller trading accounts find it easy to implement the strategies. In addition, the strategies come with added benefit that experienced traders can use in combination with other strategies to enhance the quality of their trading.
To ensure that their clients are up to speed with market information, the company sends out text alerts to all subscribers, which enable them to access real time market updates.
It is essential for traders to get adequate market information before they venture into actual trade. That is where Rockwell Trading provides adequate strategies to help traders navigate the market.
Understanding Binary Options
Binary options are a new but fast growing mode of trading in financial markets around the globe. This mode of trading differs from traditional trading in that you do not own any assets. Instead, you trade by attempting to predict how the underlying asset will move. It is more of a short period bet or a prediction rather than a long-term investment. In finance, a binary option is a trade in which the payouts can take only one of two outcomes. This is a fixed amount of money of the asset in question or nothing at all. Traditionally, payouts come in a wide range of options.
There are two main types of binary options. an asset–or-nothing binary option, and a cash-or-nothing binary option. These options are also referred to as fixed return options, digital options, or all-or-nothing options. The asset-or-nothing option pays the value of the underlying asset when the option expires. Likewise, the cash-or-nothing option pays an agreed fixed amount when the option expires.
Interestingly, unlike other forms of trading, binary options’ potential returns are known beforehand. Thus, the trader expects to receive a certain fixed amount upon successful prediction, or nothing for a wrong prediction. You can buy binary options for virtually any product in the financial market. Purchase is done by either buying a ‘call’ option if one is predicting a rise in value, or a ‘put’ option if one predicts a fall in the price of the underlying asset. There is also one-touch trade. Here, the target price is given at the start. If the product hits or surpasses the mark, your prediction is taken as successful. The broker stipulates the price beforehand; furthermore, a fixed expiry time is placed against the offer.
For example: a purchase can be made on a cash-or-nothing binary option on company ABC’s stock. The price maybe struck at two hundred dollars with a payoff of a thousand dollars. If at maturity date the stock is trading above two hundred dollars, a thousand dollars will be received. However, if the stock is trading at a price lower than that, nothing is received.
Binary options can be used to trade in all major world currencies, commodities, stocks, or indices. It offers convenience in that one can trade from any part of the world. Binary options brokers act like full solution providers by placing all your trading desires in one window. Thus, you would not be forced to open other tabs when trading in different commodities. Binary options trades may last for a minute to several hours; it is always good to trade with a mix of short and long predictions, to spread the risk across several sectors.
Sometimes there is a need to be trained by those who have been in the market for sometime, as being impacted with knowledge enables you to avoid pitfalls that most new traders stumble into. Rockwell Trading and its CEO, Markus Heitkoetter, have been in the market since 2005. This is long enough to understand the dynamics of how things work.
How To Trade Binary Options
I found this video you will teach what you need to know about binary options in less than 10 minutes.