Forex Tips and Advice

Binary options are quickly becoming a favorite of traders as both a hedging and speculation tool. While they seem relatively new, binary options have been traded for well over a decade, though they were originally traded over the counter usually between two institutional investors, mostly hedge funds and investment banking prop desks. Retail traders had to wait until 2008 before they were granted the right to trade binary options, and since then the popularity of this asset class has gone through the roof. But what exactly are binary options and how do they work? Let’s take a look:

Binary options can best be summed up as a trade that offers only two distinct outcomes, either your trade finishes in the money (winner) or out of the money (loser). This is in stark contrast to traditional vanilla options where concepts such as time decay (theta), volatility, strike price, time to expiration and the like all go into the pricing. Binary options offer a simple risk-reward proposition, which is known and clearly stated prior to entering the trade. A lot of the trading sites that offer binary options place a return percentage of anywhere between 60% to 90% for winning trades and a 0% to 15% return of capital for losing trades.

Binary options are usually offered on a variety of underlying assets across most trading platforms. Stocks (otherwise known as equities) are offered across most platforms, but usually the number of stocks is limited. Stock binary options are typically only offered on the largest, most liquid names such as Apple, Google, Microsoft, Intel, JP Morgan, and the like. Technology stocks make up the majority of stock based binary options. Foreign exchange (forex) binary options are also well represented across platforms with most major currency pairs making up the bulk of trading. Popular commodities such as Gold, Silver, Oil, Natural Gas, and Copper and Major Indexes across the globe can also be found on most binary options trading platforms.

One common misconception about binary options revolves around expirations. Most people believe all binary options have a one-hour expiration time; this simply is not true. Over the past few years we’ve seen expirations range anywhere between 15 minutes on the low end all the way up to one month. While I don’t know many people who trade one-month binary options I’m sure some have found a use for them. One of the major advantages of binary options is the short time frame and simplified payout structure so you are likely to see traders gravitate more to the one-hour binary options.

Unlike traditional day trading where you need decent market volatility to generate nice gains, binary options do not require a whole lot of movement to generate out-sized gains. So when is the best time to trade binary options…all the time! Ok, so maybe that’s a little over the top but there are certain times during the day that are ideal to trade binary options, so let’s go over 2 specific time frames.

Trading On The Market Open

This is a little tricky. Traders either strongly love or strongly hate trading on market open. Stocks move around with so much volatility that sometimes it feels like a crap shoot in picking an appropriate direction. Binary options brokers know the feeling as well so many don’t allow you to trade binary options until a certain time has passed. These market open time frames range anywhere between 5 minutes all the way up to a half an hour.  For those of you who like to see huge moves in binary option prices you may want to trade binary options as close to the open as possible. One advantage of trading close to the open are these huge moves which can place your trade firmly in the money within minutes of placing the trade. Conversely, the binary trade can move against you immediately, placing your trade firmly out of the money. However, always remember when you trade binary options you always have the ability (at least until the lock out period commences) of hedging your trade. So if the trade moves against you right away you can start to implement a hedging strategy that can, in some instances, completely negate the effects of the unwanted move. Just something to think about as you start to trade binary options.

Trading On The Market Close

While binary platforms may differ on what time they’ll let you start to trade binary options on a daily basis, they all let you trade options into the close of the market. During the last hour of trading you will at times see different stock movement patterns emerge that allow smart binary options traders the ability to place high reward / low risk trades on prior to expiration. We’ve known traders that focus solely on these market close opportunities and have made a killing doing it. This does take a lot of patience though as some wait all day and end up not placing any trades, which can be a frustrating thing. While these setups do not occur everyday, it is best to learn them as you begin to trade binary options.

If you are going to trade with binary options accept the fact that you will have days where money is lost. This is par for the course. This is why you should only invest discretionary funds.

Fear can prevent you from moving closer to your ultimate financial goals. It is important to undertand that even the most successful traders deal with fear and doubt. As a trader you must learn to manage fear.

Realize that you will have fear. It is simply part of the investment process. This means that you must accept it.

One of the big advantages of trading with binary options is that you can easily control your risk. Some trading platforms will let you bid with as little as $5 dollars. This goes a long way towards helping you get a handle on fear as you learn the ropes.

A good way to manage risk is to make sure you never place the majority of your capital in a single trade, to earn a large payout. Yes, this is very tempting, but it should be avoided at all costs. Even the trader can make drastic mistakes when too much money is placed on a call or put. Make a habit of investing no more than 5% to 10% of your total capital. You will glad that you took this advice in the long run.

Learn to hedge your bids. This involves taking out an opposite position in order to limit the loss that can occur. Another big advantage of binary options is that they are very easy to hedge, and this can be an excellent way to limit exposure drastically.

It may also be helpful to put yourself in situations with people who are also trading and can relate to what you are experiencing. Online trading forums are a good resource for this.

Asking for help.
If you are in a situation where you feel totally out of control you may need to ask for help. This help may take the form of an experience broker or a thearapist. (Remember, any investment carries risks. Seek the proper advice before investing money).

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Companies ofering Binary Options Trading services (websites with trading platforms) will need to document, in writing, their intention to submit an application for a CIF license.

These regulations will be put in place to monitor and control companies in the industry to help avoid investment fraud, among other things. If you are familiar with stock trading you may recall that the Forex went through a similar regulatory process.

The growth of binary options trading has been explosive and with such growth comes responsiblity. This new regulation should be welcomed with open arms. It will bring more traders to the industry and let binary options trading be viewed with less scrutiny.

Binary options are a type of stock option in which the payout is designed to be either a fixed or pre-approved amount of compensation. Binary options are different from plain vanilla options. You will often hear bianry options referred to as “all-or-nothing options” or ”digital options”.

The ability to bid on whether a commodity, stock, certain indices, or other assets will rise or fall before the end of the day puts trading in the reach of ‘regular people’. If you put a fixed dollar amount down and buy a call option you are predicting a certain asset will rise. If you predict a certain asset will fall, you can buy a put option. You are placing an ‘all’ or ‘nothing’ bid. This is why it is referred to as “binary”.

Placing money in binary options is quickly catching on because you can make money trading online without the usual risk to your portfolio. Binary options trading is exciting because new investors, without knowledge of various financial markets, can reasonably predict the direction of a stock or instrument. When you can do this in a specific measure of time (minutes, hours, days, or weeks) you have the ability to make a lot of money investing online in a short amount of time. (Remember, any investment carries risks. Seek the proper advice before investing money).

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Lately Binary Options trading platforms have become more and more popular. New ones are being added all the time: anyoption.com, bulloption.com, spotoption.com, binaryoption.com, etc.  These options are also known as all-or-nothing options, digital options, or Fixed Return Options (FROs). You can purchase them on stocks, commodities, indexes, foreign exchange, and other derivatives.

One of the big advantages of binary options trading is you can trade from home whenever markets are open and set up an account with a credit card. Incidentally, you can also do this without a broker.

Perhaps you should ask these questions:

1) Can you paper trade binary options for several weeks before spending real money?

2) Can you invest a specific amount of money (which should be discretionary) and be okay with losing?

3) Do you have the discipline to stick with a system until it pays off and not become distracted by the next ‘shiny object’?

If you can methodically enter the binary options market, with money you can afford to lose, and have the discipline to stick with one approach (or system) until it pans out — you may be a perfect fit for binary options trading.

You must have the time and want to learn how to trade binary options. You must also be able to remain calm and carry on after you have had a losing day, week, or month. Some investors feel that when the stock market drops is the best time to put money back in.

But remember the cardinal rule for investments of any kind is: to invest only as much money as you can comfortably lose.

Always remember that trading mistakes will occur. You will lose money. It is the nature of trading. You must be able to learn from each mistake. In fact, you must view your mistake as a lesson. Successful traders develop strategies and track those strategies to determine which ones will fair best over time. For instance purchasing Call options in a bull market and Put options in a bear market would be considered a sound strategy. (Remember, any investment carries risks. Seek the proper advice before investing money).

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Historically the stock market has been a consistent predictor of the election results. Since 1948, the
Standard & Poor’s 500-stock index has proved to be a reliable indicator of the president’s reelection.
To complicate this even further there is what is called ‘election stock market.’ Election stock markets
(also referred to as election prediction markets) are financial markets in which the ultimate values of the contracts being traded are based on the outcome of elections. Participants invest their own funds, buy and sell listed contracts, earn profits and bear the risk of losing money. Election stock markets
function like other futures exchanges, such as commodity exchanges for the future delivery of grain,
livestock, or precious metals.

But the bottom line is it won’t matter which party is back in office because you are bidding
incrementally. In binary options, a percentage of profit will not be effected by any change in the
trends of the market. These trends become important when you are looking at long term investment
opportunities. But binary options let the average person trade without the need to ‘study the stock
market’ in the traditional sense.

A binary option, also known as a digital option or an all-or-nothing, is a trading instrument with a
fixed return that is determined at the outset of the trade. A trader will
receive a predetermined payout if the binary option expires in-the money.

A Binary Option asks a simple yes or no question. An example would be will gold go up or down in the next 15 minutes? If you think yes, you call the Binary Option. If you think no, you put.

The great advantage of binary options is that the actual price of gold does not matter. You are simply
bidding on the direction of the stock. The stocks will continue to fluctuate whoever is in office.

Binary Options offers several opportunities for trading which can be split into four categories:

Intraday – at times within the current trading day
Daily – at the end of the current trading day
Weekly – at the end of the current trading week
Event-based – at a specified future time and date

In addition, binary options trading offers you the ability to earn 70%, or more, within your first 15
minutes of trading. Obviously there are risks but if you are looking to exponentially increase your
investment binary options trading is certainly worth considering.

The added benefit of being an active binary trader is that you can spend less time watching politics
and more time enjoying life.(Remember, any investment carries risks. Seek the proper advice before investing money).

The goal is straight forward. You want to add more money to your portfolio (or bank account) without too much risk.

Traditional stock market traders have to focus on the price movement of stocks. They understand that stocks have regular cycles where the price falls and rises between two points. Their goal is to purchase the stock near the cycle low and sell when its price is near the cycle high. Then to repeat that cycle over and over and use the gain as income.

You will need to anticipate the expected direction of the price movement of the underlying asset. Unlike traditional options, knowing the direction of the price movement, as well as magnitude of the movement, is not required.

There is a reason that binary options trading has become so popular in recent months. One reason is the current economic downturn. The other reason is because anyone can do it! You don’t need to spend hours each day studying stock trends and corporate acquisitions. For as little as $5 dollars you can place a trade.

But don’t let the low price of entry fool you. Binary options trading can return some of the highest payout rates. You could get as much as 85% on options that expire in the money. In some cases, with the right training it is possible to achieve a 700% return on your investment.

You can visit a binary options trading platform and process the transaction yourself in a matter of minutes. Not needing to involve a broker makes this simpler and cheaper! But remember you can either earn a high return on the binary option if it ends up “in the money”, or you lose the entire investment. This is why it is referred to as ‘all or nothing’ trading.

Binary options trading can provide you with an easy way to trade forex, stocks, indexes and commodities. Before investing in a binary options, make sure you understand the underlying asset, are familiar with the relevant financial markets and where the asset is traded.  Unlike a traditional option, the payout amount is not proportional to the amount by which the option ends up in-the-money. If your trade settles in-the-money by even one tick, you receive the entire fixed payoff amount. (Remember, any investment carries risks. Seek the proper advice before investing money).

Financial intelligence is the gathering of information about the financial affairs of entities of interest, to understand their nature and capabilities, and predict their intentions. It is easy to understand how such an approach should be used in relations to binary options trading.

One of the big advantages of binary options trading is you can trade from home whenever markets are open and set up an account with a credit card. Incidentally, you can also do this without a broker.

Gathering Information
You can search for the most popular online trading options by entering the words “binary trading platforms” into your favorite search engine. What will return is a list of places to trade online. Your next step is not so easy. Now you must select the best platforms based upon your trading preferences.

Many believe that the best way to trade in binary options is to go through an online broker. This is a person who writes contracts for various binary options. You have the choice of choosing several assets such as currency pairs, commodities and stocks. These contracts come with a purchase price, an expiration time, and the conditions for profit. These conditions are called; a strike price or a barrier price. You can find online brokers that deal in multiple contracts. This will allow you to trade both stock binary options and forex binary options with the same broker.

Like all new industries binary options trading is loaded with jargon. These are the terms that traders use in relations to making trades. The basics can be picked up in a few days. A good way to settle into the world of binary options trading is to pick up a book from the library (or Amazon.com). Thanks to the power of the internet the ability to learn binary options trading is well within your reach.

You can get intelligence, and trade binary options, right from the comfort of your home. Thanks to the accessibility of the ‘money never sleeps’ Forex market you can trade every day of the week. It looks like this kind of trading is the future of the stock market. The sooner you get smart about it the sooner you can profit. (Remember, any investment carries risks. Seek the proper advice before investing money).

There are many who consider online sites that offer binary options trading as gaming platforms. Their view is that because of their negative cumulative payout (they have an edge over the investor) and because they require little or no knowledge of the stock market to trade in it is gambling.

Most platforms have their investors sign a “Terms and Conditions” document before trading that warns the investors about the risk involved in dealing with binary options. However, in light of the high risk involved, it would be expected that the risk of trading in binary options will appear in this document in bold letters as well as on the platform itself. In addition, advertisements for binary option trading platforms tend to highlight only the high profit but not the high risk involved.

Despite all of the excitement surrounding binary options trading it does have perceived disadvantages. The following are some factors to consider before investing in binary options.

They are the most expensive financial instruments in the market for retail investors. There are cases where the bid versus ask price spread can be as high as 40% for some underlying assets. This means that you will have to ‘be in the money’ most of the time to offset this spread.

Some investors feel that it is too short term. But to traders this is one of the powerful attractions of binary options trading. Some critics site the precarious movements in the market in the short term makes this activity too hard to predict.

Binary options markets are much more volatile due to additional political, economic and currency considerations, so there is a chance for large profit through options trading, but at the same time  there is risk for large losses.

But many new investors will continue to be drawn to binary options trading because of its simplicity. It would be wised for all new traders to spend a significant time educating themselves about the market in general and the risks of binary options trading.

To be sure options trading is a risky venture and binary option trading is no less risky. (Remember, any investment carries risks. Seek the proper advice before investing  money).

Imagine waking up, doing an hour, or two, of binary options trading and then having your entire day free! Is this a fantasy or can it become a reality.

Binary options trading gives you the ability to earn 75% or more with trades that can last only minutes. Obviously, it doesn’t take too many successful trades to realize a return of a couple of hundred dollars per day (or more).

A binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all. The two main types of binary options are the cash-or-nothing binary option and the asset-or-nothing binary option. The cash-or-nothing binary option pays some fixed amount of cash if the option expires in-the-money while the asset-or-nothing pays the value of the underlying security. Thus, the options are binary in nature because there are only two possible outcomes. They are also called all-or-nothing options, digital options (more common in forex/interest rate markets), and Fixed Return Options (FROs) (on the American Stock Exchange). Binary options are usually European-style options.

One of the biggest advantages of binary options trading is the ability to Control your risk. You will always know how much you risk losing from an option. This also allows you to establish a level of risk that is acceptable before putting down money.

As a trader you simply need to bid on the direction of an asset’s movement. In other words will the price of a security go up or down? Unlike traditional investing you are not concerned about the actual cost of the stock or commodity. You are merely trading on the direction it will move in a specific period of time.

Binary options trading gives regular people the opportunity to experience exciting returns on their investment, with a fixed level of risk. Your payouts can occur within minutes. This ability to get quick returns on your investment is what allows you to earn so much money in a short period of time. Most trading platforms have ample information, and some training, to get you up and going quickly. (Remember, any investment carries risks. Seek the proper advice before investing money).