To call America the center of the economic world is no understatement. Almost all major trades in the world pass through the USA and no matter what a firm may be, if it has a global presence, you can be sure that it has a base located somewhere in the USA. Thus, it is no wonder to note that America is one of the most highlighted places when it comes to online trading. Since Binary Options is the most lucrative forms of trading prevalent in today’s world, it makes sense to understand exactly how it works and what its prospect is in today’s context.
What is Binary Options?
Before going further, it needs to be understood exactly what Binary Options is. For the uninitiated, Binary Options refers to a new kind of trading which is not related to studying all the different kinds of thick textbooks in order to trade efficiently. Of course, you still need to understand how the market works and what the various driving factors are, but you will not have to go in depth in order to trade Binary options efficiently. Why? Well, for starters, Binary Options does not trade on the commodities in the market, but on the market as a whole. This means you will be betting on the way the market is expected to behave in certain time periods with respect to a commodity. If your prediction is true, you get a sizeable amount of return (as much as 100% on the premium). Besides the ease of operation, Binary Options trading also ensures low capital investment and fast returns.
While it is true that Binary options trading offers a 50-50 chance of winning a trade, this does not mean you should leave everything to chance. After all, there is no guarantee you will win unless you have some strategy in place. Of course, there is no guarantee you will win even with a valid strategy, considering the volatility of the global trading markets, but a strategy in place is always better than blindly going forth with a trade hoping you will win.
This is the essence of Binary options trading. The straddle strategy plays on the market being volatile. When the price of an asset falls, you would need to place a CALL instead of PUT. This is done with the belief that the asset price will bounce back soon. The opposite is done when the asset price increases, making a PUT instead of a CALL. However, it needs to be understood that this strategy only works when there is an anticipation of an important news breaking in soon. When the news is finally out, the market stabilizes and it cannot be used anymore.
As the name suggests, the trend strategy is nothing more than following the trend of an asset you want to trade in. When you understand that the price of an item has fallen below the prediction level, and is going to rise soon, choose to CALL. Similarly, follow the opposite when the asset price is expected to fall. A visual aid for identifying the trend in any asset is important when trading according to the trend strategy.
- Risk Reversal
This is a very commonly used Binary options trading strategy. Instead of opting for either of CALL or PUT, in this strategy, a trader opts for both in an asset. This is a good strategy in case of a volatile market and guarantees that one of the either options will give a guaranteed return in terms of investment.
- In-depth Research
This is a general strategy that is common across all forms of trading. It simply means that you would need to conduct detailed research into an asset before you decide to invest in it. It is extremely effective when it comes to Binary Options trading since almost all forms of fluctuations in case of an asset depends on major news from global corporations. While it is time-consuming and needs a lot of effort, if done correctly, guarantees a positive return.
Choosing a trader
While a good strategy is important in the case of Binary Options trading, it is equally important to choose the right trader for the trading. This is important because, in today’s world, there is no dearth of fake trading websites who are out to scam you out of your hard-earned money. The first thing while choosing a trader is to see the regulatory authority under which it is registered. In the US, brokers are regulated by the Financial Industry Regulatory Authority (FINRA), an authority directly under the Securities and Exchange Commission (SEC). The next thing to look for is the market capitalization of a broker. This is important because you need to know whether a broker is able to pay your winnings at all times. While at it, also check the number of platforms which are supported. Binary Options trading is a highly volatile sector of trading involving split-second decisions made whenever the niche for profit arises. You need to know whether you can take advantages of these cases via mobile platforms as well. Finally, check the customer services and the kind of review it has received over time. In short, do your research well in advance before choosing a trading platform. Get the best advice about binary options software from Louis Harris at Trusted Binary Reviews.