How to Trade Binary Options Explained & SimplifiedBinary Options Trading Success by Eezywealth.com 9...
Transcript of How to Trade Binary Options Explained & SimplifiedBinary Options Trading Success by Eezywealth.com 9...
Binary Options Trading Success by Eezywealth.com
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How to Trade Binary Options Explained & Simplified…
Binary Options Trading Success by Eezywealth.com
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LEGAL NOTICE
The Publisher has strived to be as accurate and complete as
possible in the creation of this report, notwithstanding the fact
that he does not warrant or represent at any time that the
contents within are accurate due to the rapidly changing nature of
the Internet.
The Publisher will not be responsible for any losses or damages of
any kind incurred by the reader whether directly or indirectly
arising from the use of the information found in this guide.
This report is not intended for use as a source of legal, business,
accounting or financial advice.
Trading in the financial markets is for people serious about
managing their own investments and proper education in the
methods and understanding of trading is the sensible way to
proceed.
All readers are advised to seek services of competent
professionals in legal, business, accounting, and finance field.
No guarantees of income are made. Reader assumes no
responsibility for use of information contained herein, and
information was correct at time of publication.
The author reserves the right to make changes without notice.
The Publisher assumes no responsibility or liability whatsoever on
the behalf of the reader of this report.
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Introduction:
Since the launch of online share trading platforms where you are able to trade live in the financial markets binary options share trading has grown enormously in popularity among new and seasoned share traders alike. In the past trading in the financial markets was solely the realm of banks, large corporations, financial institutions, and qualified
financial advisors and brokers. That’s all changed now and if you are prepared to manage your own investments you can do so enjoy excellent growth while having the knowledge and pride of trading in the financial markets. It is sensible to beware of the pitfalls and avoid joining offers where inflated figures of fast track wealth are promised because more often than not these are false and in addition you could end
up losing your entire investments. Trading in the financial markets is serious business, but it’s equally exciting and satisfying watching your money and even skimming off the profits to improve your lifestyle. The smart way forward is joining registered, licensed regulated share trading brokerage platforms and within this book you will find direct links to well-known clients that are widely respected in binary options share trading fields.
In conclusion: Spreading your portfolio is a sensible decision meaning that you can set long and short term trades, Forex and commodities trades or whatever you prefer so that each complement the other. Education for smart trading is a must and this guide gives you some insight on how to get started!
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1) What Are Binary Options?
Binary options are estimates of underlying assets performance
during a given time frame.
To understand the simplicity and wonder of binary
options trading, let’s first take a look at how investment in other
trading markets usually works.
In most forms of investment the investors actually purchases the
asset they invest in, and the value of the profit and loss is
determined upon the changing value of the asset.
If the investor sells the asset back to the market whenever its
value increases, then they're making a profit, and if they sell the
asset back to the market when its value decreases, then their
money is lost.
This type of investment requires the investor to constantly worry
about when to sell the asset, and get out of the market to avoid
exposing his entire account to the market’s volatility. Conversely,
Binary options simplifies this entirely making trading fast and
with smarter decisions.
In options we trade futures on the market and not in the market
like other trading methods, and thus the amount of psychological
stress isn’t expressed, as you are just predicting the asset's
movement for a predetermine time frame.
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2) The Definition of Binary Options Trading
The word binary stands for “having two parts”. Generally
speaking, all you need to do is predict either “Call” or “Put“.
Binary options trading have only two investment possibilities for
you to predict and then choose between.
a) One investment possibility is expressed when you predict
that the price of the asset will rise, this type of investment is
named “Call” option.
b) The other possibility is presented when you predict that the
price of the asset will fall, this type of investment is
named “Put” option.
Choosing an asset is the first step of your investment.
For instance, if you have an interest in gold prices, you may
choose to place a binary investment in gold.
Obviously, the more familiar you're with the gold market the
better your chances are of successfully predicting the fluctuations
of gold prices.
The most popular binary options trades are done in the largest
sector of the financial markets which is the Forex markets. This is
where country currencies are compared with each other or traded
against each other for want of easier explanations.
Forex stands for ‘Foreign Exchange’ also called FX by professional
traders. Huge fortunes can be made with clever binary options
trading if you have done your homework carefully.
On the other hand you can also lose a lot of money by being
careless and greedy instead of keeping a cool head and being
watchful which is the wiser choice.
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3) What Assets Can Be Traded as Binary Options?
Most registered online share trading platforms offer a huge
selection on choices to trade with using binary options.
Opteck which is the trading Account I use, has a wide variety of
binary contracts available to traders.
You can either trade with:
Indices - Such as NASDAQ, Dow Jones, FTSE, Nikkei and many
more.
Forex - Combinations for all the major currencies such as USD,
EUR, GBP, JPY and AUD just to name a few examples.
Commodities - Gold, Silver, Oil, Corn, Coffee, platinum and
several others.
Stocks - Over 50 of the biggest and most interesting companies
in the world from a variety of industries are available in the asset
list, amongst them - Google, Deutsche Bank, Coca Cola and many
others…
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4) Where Can I learn How to trade?
The best online share trading platforms have everything you need
offering both novice and experienced traders a valuable resource
for learning and improving your binary options trading techniques
and strategies.
Every registered trader has high quality educational material at
his fingertips, and a smart and diligent trader will always do
better than the investor relying on gut feelings and luck.
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5) How Do I Start trading Binary Options Online?
The first step is opening up your trading account and after
registering your details a consultant will guide you through the
process explaining everything you need to know about the
process.
When opening up a trading account with the top online share
trading platform companies you can be secure in the knowledge
that you have ongoing live support, chat facilities and education
all vital to sensible trading in the financial markets.
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Understanding Binary Options Basics
Binary options are an investment tool, also known as a
“fixed return” or “digital options”.
1. This tool is used to deliver a fixed return based on a predicted
forecast. It can also enable traders to earn high returns in short
time frames.
2. It can be used to trade underlying assets and its defining
characteristic feature is ease-of-use.
3. Successful results are solely dependent on price direction and
not the size or magnitude of an assets’ movement.
Unlike traditional options, the trading of binary options involves
shorter expiry times, predetermined yields, and a binary option
cannot be sold before the selected expiry time intervenes.
The payouts in binary options offer you three possible winning
outcomes;
'In the Money', 'Out of the Money' and 'Tie'.
These terms indicate the ending of the trade in reference to the
market price past the expiration time.
Meaning, your payout is subjected to the asset final stop,
whether it ended above, below or aligned with the market price.
Most ‘In the Money' options pay out a value of 65-71% of the
initial investment:
… And those that are ‘Out of the Money’ result in a loss of
around 85% of this investment.
Simply put, a binary option is a financial instrument that provides
you with access to global assets.
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Its simplicity, minimum risk and quick earnings have fostered its
popularity and are also the building blocks upon which regulated
registered licensed online share trading platforms are instigated.
Assets are the measured value of the stock, commodity or
currency from which the option is derived. Because of the assets'
lack of ownership, when a Binary Option is purchased the cash
value reflects the live market price of the asset it is based upon.
Most common assets refer to the following four major
groups:
1. Stocks (Lloyds, Barclays PLC, Google Inc., etc.)
2. Indices (FTSE-100, IBEX- 35, S&P 500, etc.)
3. Commodities (Gold, Silver, Oil, etc.)
4. Currencies (Euro – US Dollar, British Pound – US Dollar, US
Dollar – Turkish Lira, etc.)
What are call options?
A call option grants the trader profit whenever the option's price
is higher than it was at the expiration time, i.e. the option expires
above the strike price.
If the option expires at precisely the level of the strike price, the
initial investment is reimbursed. In the stock market arena, this
action is called 'going long'.
What are put options?
Conversely to call options, ‘put options’ grant the trader profit in
the event that at the time of expiration the option's price is lower
than it was at the time of purchase, i.e. the option expires below
the strike price.
These options are similar to ‘going short’, where the optimal
outcome for the investor is for the price to fall. If the option
expires precisely at the level of the strike price, then the initial
investment is reimbursed.
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What is a strike price?
A strike price reflects the current market price for an underlying
asset when an option is executed.
What are investment amounts?
The investment amounts are the sums a trader invests in trades.
The amounts are not fixed and can vary, according to your
trading desires.
These amounts also set the level of pre-determined payout
percentages and return of investment, at the time of the options
expiration time. Meaning, you control the extent of your losses
and profits.
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Starting Out To Trading Binary Options
How do I trade?
To invest in a Binary Option in an underlying asset, you first
decide whether the option price at the moment of expiration will
rise above or fall below the current strike price.
Predicting for a price rise – makes it a 'call' option. If you predict
the asset's price to drop under the strike price- it'll make it a 'put'
option.
Then, you choose the options expiration time; it can range from
one hour to one month. Next you decide upon your investment
amount.
Your payout will be pre-determined according to your investment.
To execute the trade, you then either click on the 'put' or the
'call' button.
Following this action, an investment sheet will open up, for you to
enter the trade information and approve it. The information sheet
will remain on your screen from that moment onwards and will
constantly update according to your underlying asset price
change.
*Notice, before the trade has been approved, it can be cancelled
at any given moment by pressing the "X" button.
What are the returns on successful investments?
The return on a successful investment will make you a wealthier
trader by 65%-100%.
Each and every underlying asset has its own pre-determined
payout which is clearly indicated on the website.
The pre-determined payouts vary amongst the different
underlying assets.
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For example, if you invest $200 in a 'call' option of an asset with
an 85% pre-determined payout; you make a $170 profit on top of
the $200 investment.
What are my returns on options which expire 'Out of the
Money'?
If the Binary Option expires ‘Out of the Money' the investor will
lose initial investment. On the majority of assets a Sell option is
available. This option allows trader to sell the position before
expiration, for the current option price.
Investment Amounts
The maximum investment amount varies and is determined by a
number of factors, though traders are not restricted to buy
multiple options.
If you were denied to trade because your investment exceeded
the maximum amount on a single option, instead, spread your
investment across several options accumulatively purchased.
Thereby you reduce the risk of an "All in" loss on one option, and
still reach your desired investment sum with multiple options and
possible wins.
What are the displayed quoted prices/rates?
The underlying assets' value often changes and as a result the
change reflects on the asset's quoted price – the level.
The levels express the average price of the assets according to
global financial exchanges, based upon an algorithmic data feed
which is retrieved from various providers.
What are expiry levels?
An expiry level is the price at which the option officially expires
according to our quote provider.
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Once the option expires, its price determines whether the trader's
investment is 'Out of the Money' or 'In the Money'. Expiry levels
vary across the different underlying assets.
What are expiry times?
The expiry time reflects the precise time and date a binary option
expires. Prior to entering a trade, it is in the hands of the trader
to pre-determine the asset's expiry time.
Top Binary Options Platforms enable you to trade on a
countless selection of expiration times, ranging from 60 seconds
to 24 hours.
How does the purchasing of traditional stocks differ from
investing in binary options?
The contrast between binary options and traditional stocks is
primarily regarded to their acquisition, or better yet, lack of
acquisition.
Traditional stock options are purchased through stock exchanges,
whereas the binary option does not involve any acquisition,
merely pure trading.
In addition, binary options are more popular with investors
because they offer shorter options contracts than traditional
‘vanilla’ options. They offer increased flexibility and an utterly
convenient expiry time ranging from 60 seconds to 24 hours.
The traditional traded options are characterized as having longer
expiry dates, which price fluctuation levels at the time of sale
regulate, and the absence of a predetermined payout rate.
Their most prominent advantage hinges on their capability to be
sold at any time, whereas binary options are govern by their
predetermined time of expiry.
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Trading Breaks
From time to time there are occasional, short-term technical
difficulties which prevent investing. These problems are often
resolved quickly, and soon after the investor can once again place
investments.
Can I change the expiry times or time frames?
No, the time frames are set before you enter the trade. Many Top
Platforms have a wide variety of binary options time sets;
examples options expiration time vary between 1 minute and 1
week.
In addition you can have as many as 20 trades open
simultaneously, arming you with a lot of flexibility within the
market.
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Smart Trading Strategies for Binary Options
Strategizing your investments is critical for your overall binary
options trading success. Just as trades vary, applying the correct
binary option strategy is also a dynamic art all traders ought to
master.
Having a better control of your binary option trades is essential to
your understanding about the financial markets behavior.
The more you apply and follow these trading strategies, the more
probability there is that your trade will end as a successful one.
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Examples of Binary Hedging/Straddle
Strategy …
Applying the hedging/straddle binary options strategy
is comprised of a simultaneous trade on one asset in opposite
directions.
This trading strategy includes risk management features which
prevent you from enduring a full loss of your traded invested
capital and the substantial chance to profit.
The strategy is based on the presumption that "what goes up,
must come down", and it works as follows:
1. Choose your general direction: decide if you wish to invest in a
“Call” or a “Put” option.
2. Choose your underlying asset and invest according to the general
direction you earlier decided upon.
3. The trading strategy's tipping point; once the price of our
underlying financial asset advances according to our predicted
assumption, you make an opposing investment.
Despite the positive direction the trade has taken, traders ought
to know that the potential threat of a sudden shift of the asset's
general direction continuously lurks their trades. The accepted
solution here would be to make an opposing investment.
If in step 1, your general direction leads you to invest in a “Call”
option, in step 3 you will invest in a “Put” option.
Consequently, you're now trading both “Call” and “Put” options,
thereby minimizing the risk of losing on both options, and
maximizing the chances of gaining from one of them.
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In other words, the hedging binary trading strategy guarantees
you'll end up “in the money”- its risk management in its finest
form.
To make things even better, if by the end of the trade the asset's
market price was between the striking price of your first and
second investments, you can actually end up benefiting from both
trades.
Example:
The table below represents the USD/JPY price for a potential
“Call” option. Let's assume the price will breach the descending
trend line.
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The price breaks the trend line and is retesting it before
continuing its movement upward. Corresponding to the hedging
strategy, at the retesting point, you invest in a “Call” option.
Once the price movement is corresponding to your prediction,
i.e., the option is “In the Money”, you wait for an opposing trend
line to break again toward a decline. As a result, you lowered
your risk and doubled your potential to profit.
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The Hedging/Straddle Strategy Scenario Explanation
Normally, if you invest $200 in the USD/JPY option, as displayed
on the chart above, and the asset's return is 85%, you either lose
your $200, or alternatively, if you implement the above
mentioned strategy, in the event that the trade ends up “In the
Money”, you gain $170-even if one the options expires “Out of
the Money”.
Applying the straddle binary strategy will spring different results
to your trade.
If all of the conditions are correct; the price movement is in your
predicted direction and you're “In the Money”, you can take this
investment to a whole new level by investing in an
opposing “Call” option.
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Generally speaking, there are 2 possible outcomes to this specific
scenario:
1. If the market's price either rises or falls over the striking price of
the “Put” or “Call” options at the end of the trade's time frame,
the trade ends “In the Money” for one option and “Out of the
Money” for the other option.
2. Hence, you made $170 and lost $200, leaving you with a loss of
$30.
In the event that the market’s price stays between the striking
price of the “Call” and “Put” options, the outcome would be a gain
of $340.
Correction Binary Strategy
During the beginning and ending of round hours, assets tend to
undergo unexpected surges (both upwards and downwards).
These surges also occur prior to, during, and after important
market announcements and are exactly what you should look for
in order to apply the Correction binary trading strategy.
The principle of this strategy is founded on the Correction rule.
The rule states that if a price of an asset surges upwards or
downwards and a gap appears between the current and previous
price of the asset, the asset will then correct itself, and return
back (close the gap) to its previous price.
Now that you know how the Correction rule affects an asset's
market price, it is possible to leverage from it.
Using the graphs' support and resistance lines, or the trend line
that appears in technical analysis in your trading account, you
can identify price gaps.
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The Correction strategy asks you to detect such gaps and then
execute a binary option trade in the opposite direction.
Conclusion:
Binary options can be seen to be an exciting way to increase your
investments being in full control of the decisions you make. As
you can see although it IS possible to become wealthy trading
there is a learning curve involved which is not negotiable.
Get Rich quick schemes, forex robot software, trading strategies
and other offers that promote big money fast cannot be relied on.
It makes sense then to begin the proper way learning how to
trade online and it’s not hard when you have all the right tools at
your disposal.
Below are some useful Links to learn more about Trading online
binary options and whatever you prefer in the financial markets.
No matter what experience you have even if it is none at all you
can learn how to trade online and join the exciting revolutions of
making money online this way!
Some Content Thanks To Opteck Trading Platform.
Links:
Trading Online Platforms
Trading Blog
60 Secrets Binary Options Trading
Trading For Beginners