What is Binary Options trading?

What is Binary Options trading?
Binary Options are one of the new and simple financial trading products made available to traders. Binary Options are a form of an option that provides a fixed deadline for expiration with a fixed payout. Binary Options trading only has two outcomes for any trade PROFIT or LOSS. If you are successful in a trade you get up to 95% * return on your investment, else 100 % of the invested amount is lost.

Binary option trading is a type of investment that involves predicting the price movement of an underlying asset within a specified time frame. The underlying asset can be a stock, commodity, currency pair or index. The goal of binary option trading is to make a profit by correctly predicting the direction of the asset price movement. Here are the steps involved in binary option trading:

Step 1: Choose a broker
The first step in binary option trading is to choose a broker. There are many brokers available online, so it is important to choose a reputable one. Look for a broker that is regulated by a reputable financial authority, offers a wide range of assets to trade, and has a user-friendly trading platform.

Step 2: Select an asset
After choosing a broker, the next step is to select an asset to trade. This can be a stock, commodity, currency pair, or index. Choose an asset that you are familiar with and that you believe will move in a predictable direction.

Step 3: Select an expiry time
Once you have selected an asset, the next step is to choose an expiry time. This is the time frame in which you predict the asset price will move. Expiry times can range from 60 seconds to several months.

Step 4: Choose the direction of the asset price movement
After selecting an expiry time, the next step is to choose the direction of the asset price movement. You can choose to predict that the asset price will go up (call option) or down (put option).

Step 5: Decide on the amount to invest
The next step is to decide on the amount of money you want to invest in the trade. This amount is known as the “stake” and can range from a few dollars to thousands of dollars.

Step 6: Execute the trade
After deciding on the amount to invest, the next step is to execute the trade. This is done by clicking on the “call” or “put” button, depending on the direction of the asset price movement you have chosen.

Step 7: Monitor the trade
Once the trade has been executed, it is important to monitor the trade. This involves keeping an eye on the price movement of the asset and the expiry time. If the asset price moves in the direction you predicted before the expiry time, you will make a profit. If it moves in the opposite direction, you will lose your stake.

Step 8: Withdraw your profits
If you have made a profit, the final step is to withdraw your profits. This is done by requesting a withdrawal from your broker. Most brokers have a variety of withdrawal options, including bank transfer, credit card, and e-wallets.

In summary, binary option trading involves selecting an asset, choosing an expiry time, predicting the direction of the asset price movement, investing a stake, executing the trade, monitoring the trade, and withdrawing profits if successful. It is important to choose a reputable broker, select assets you are familiar with, and trade responsibly. Check out the best Binary Options Brokers in Kuwait.

How to trade:

1. Choose your asset
2. Make a prediction
3. Select investment amount
4. Trade (by clicking CALL or PUT)

Example:

•  If EUR/USD is trading at 1.12052 and you predict the currency pair will be lower in the next 5 minutes and you want to invest $25?
• Find EUR/USD in the broker’s asset list, select the time period of 5 minutes, enter $25 as your investment amount, click on the PUT (SELL) button and the trade is executed. The return on this trade is 85%.
  You’ve now predicted that the currency pair EUR/USD will be lower than the current level of 1.12052 in 5 minutes time.
• After 5 minutes EUR/USD is trading at 1.12012, lower than the price 5 minutes earlier, when you entered the trade. Your trade gets closed automatically by the broker after the expiry of 5 minutes.
• Since EUR/USD was trading lower as you predicted your trade is closed for a profit (known as in the money). The profit for a $25 investment with a return of 85% is $21.25 ($25 x 87% = $21.25) which is credited to your broker account almost instantly.
• If your investment amount had have been $100 you would have made a profit of $85 on just this single trade.
• There are different expiry times starting from 30 seconds to up to 5 minutes in Turbo Trading option.
• And expiry of every 10,15 minutes, 1 hour and 1 day, end of the day also available with many binary option brokers.

Binary options trading easy or complicated:

•  Binary trading is quick, simple and very profitable, but at the same time risky. You may lose the invested amount completely. You would have lost $25 in the above-shown example trade if you were wrong in your prediction. If EUR/USD would have closed above 1.12052, you would have lost the trade and your invested amount $25.
• Hence it is very important to manage the risk in binary options trading, in order to be a successful trader.

Binary Options Trading – Conclusion

The conclusion of binary options trading is that it is a risky and complex financial instrument that should be approached with caution. Many traders lose money due to the high level of risk involved, and the industry has been plagued by fraudulent activity. It is important to do thorough research before investing in binary options and to only trade with a reputable broker. Overall, binary options trading may not be suitable for everyone and should be treated as a speculative investment rather than a reliable source of income.