Are you considering investing in binary options trading?
Do you want to know if this online financial tool is safe?
Binary trading is a fast growing digital investment, which everyone can benefit from easily and swiftly. It is readily accessible through your computer, tablet or mobile phone, and does not require any prior experience, having an easy structure and immediate results. Yet this alluring financial mechanism is also highly volatile and risky. How will you know if it suits your profile?
Binary Options Trading System
Binary trading is not a scam, but rather a high yield investment which involves high risk. As in any industry, and especially businesses which are 100% internet-based, there are also unreliable companies you should avoid.
Indeed, the best way to learn digital trading strategies while investing safely and with proper guidance, is choosing a binary options broker that is fully regulated and provides updated and modern educational tools. There are very few companies that comply with these basic and important demands, and those are the firms you should ultimately choose.
Although the system used for executing trades on binary platforms is very simple and easy to learn, this has a misleading effect, because the ease with which a trade is executed does not parallel the difficulty of achieving consistent high level accuracy. Only such results lead to profits.
Assets in Binary Options Trading
An options’ trade follows three simple steps:
- Selecting an asset
- Defining the investment value
- Predicting the outcome of the option
The outcome of a binary option is always composed of two unique possibilities. In other words, the trader may predict one of only two possible results.The expiration of an option occurs in most cases within fifteen minutes, and as soon as it expires, the outcome is known and the profit is credited to your account (when the prediction was correct).
It takes very little skill to select an asset from a list, type in a value and click one of the two available outcomes. In that sense, binary options can be traded without any financial knowledge or ability.
Yet knowing which asset to choose, how to evaluate the oscillations of the asset’s value and understanding the mechanisms of stock markets, greatly improve your chances of success.
Type of Assets:
There are four basic types of assets available in binary options trading:
- Stocks – A stock of a particular company represents a very small share of that company’s value and ownership
- Commodities – Any basic good, such as gold or oil, that is traded in financial markets
- Indices – An index is a virtual portfolio of assets from a particular market, with a price calculated to represent the oscillation of that market’s niche as a whole
- Forex (or currencies) – Currency pairings, such as the US dollar vs. the Euro
Whichever the asset selected by the customer, binary options trading does not involve the purchasing of the asset itself. The trader is not buying a stock nor a commodity, nor does the trader need to buy dollars or any currency in order to select a forex option.
In binary trading the consumer is only acquiring the right to predict how a particular asset will perform in the stock market within a specific period of time. For example, a Google binary option is one in which a trader selected the Google asset from the stocks asset index, then established the value to be invested, and predicted if the Google stock will have a higher or lower price at the time in which the binary option is set to expire (the expiration is known to the trader before finalizing the acquisition of the option).
At no point does the client need to actually buy Google shares. Therefore, the asset index of a binary options broker is the list of stocks, commodities, indices or forex pairings in relation to which the trader can make a prediction. The broker is not selling, and the trader is not buying, the asset itself.
Establishing a trading strategy
Many aspects influence the outcome of a binary option. Just to name a few:
- The day of the week (markets behave differently as the week of trading progresses)
- The economic situation of the market in which the asset is traded
- The financial vigor of the specific asset
- The trading volume during the trading session
- The history of that asset’s oscillation
- Probability laws that govern a set of trades
In order to trade with confidence, avoid unnecessary risk, and succeed, it is imperative to have some knowledge about at least part of the items above. To some new potential online traders, that may seem as too tall a task. Yet with the proper guidance, having the ability to place trades with a higher percentage of accuracy is surely possible.
Serious binary options brokers employ professional investment consultants, that assist you in becoming a skilled trader. By helping you understand different binary options trading strategies, risk management systems and basic financial terms, they increase your ability to read the numbers more precisely and earn money constantly.
Although an array of strategies are available to binary options traders, it is still possible for you to earn substantial amounts of money without having any knowhow whatsoever. For that purpose, trading softwares have been developed to enable clients to choose an automated investments system.
Binary options trading signals
Automated trading, also known as algorithmic trading, is the instance in which a software is choosing and/or executing the trades independently. The basis of this concept lies in the ability of the software to scan the performance of entire stock markets in real time, and uses algorithms to identify which are the preferred trades to be made.
Automated investment in binary options trading is commonly offered through signals services. The client using this service will receive a signal, such as an sms message, informing about a potential lucrative trader.
Yet this systems have greatly evolved. The most advanced signals services are nowadays incorporated to the trading platforms, and are able to execute the trade independently. All that is left for you to do is approve each individual transaction and benefit from the high level of accuracy that these systems can achieve.
Caution is necessary, though. As in most other elements related to the binary options industry, most signals services are bogus and not reliable.
Selecting binary brokers
Trading binary options involves risk. The initial odds are set against the trader and favour the broker. To create profits the average success level has to be higher than 55%, which is considered a very high level of accuracy. Binary trading can also lead to the total loss of the investment, and therefore risk management is essential. When planning an investment strategy, special attention must given to retaining gains.
That volatility is one reason why binary options are often related to scams and frauds. Such is the case of any high yield investment, and it is common that frustrated traders express their anger by launching fraud accusations. Yet, the leaders within the binary options field are serious and regulated companies, which clarify to clients the risk level and assist traders in acquiring a set of skills with which to succeed.
It is imperative to choose a licensed broker, because only such a corporation fully guarantees the safety of your investment. This step will decrease the level of risk drastically, because it will allow you to trade with a serious company and also receive proper financial guidance.
Identifying Scams in Binary Trading
In order to offer binary trading services, an internet site must have access to a binary options trading platform, where the daily trading sessions occur. Although this might seem very obvious, the fact is, most brokers do not own such a platform.
Instead, these sites lease a platform from a trading software provider, and such a broker is therefore considered a white label. In other words, the customer is placing trades through the broker’s site, but the trade itself is not executed physically within that site, because the site does not possess a platform.
The reason this information is very important to you, is that such companies cannot be fully regulated. Since the financial transactions made by clients are happening through a platform owned and operated by a third party (the platform software developers), your money would only be safe if both the broker and the developer are fully regulated. Normally, you have no way of knowing whether this is true.
As a result, the only truly safe companies in the binary options field are the very few which have created their private trading environment and interface. If you wish to avoid scams, trade solely with these type of brokers.
Binary Options Trading – Conclusion
- Although binary options trading is not a scam, within this field, there are several unreliable sites.
- The trading process itself is simple, although success does demand a certain level of knowledge.
- Nonetheless, you don’t need to be a financial expert. The best brokers will provide all the assistance and educational tools you need.
- In fact, selecting a reliable broker is an important step, and the best way to do that, is by preferring regulated and licensed companies.
- Another possibility is to resort to automated trading. Certain binary trading signals have been known to increase profit rates substantially.
- No knowledge whatsoever is necessary in order to invest using signals.
- Binary options are a financial derivative, and this type of financial tool is known to involve high risk.
- Binary trading is no different, and should be considered a high yielding yet volatile opportunity.