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How To Choose A Binary Options Platform
Choosing a Binary Options Platform
Binary Options Trading was introduced in the Unites States of America in the year 2008. It is also referred to as digital options, fixed return options or all-or-nothing options. Binary Options trading involves a prediction of the movement of price of a currency, commodity, stock or index by a selected expiry date and time. The trader does not purchase or own any asset, but only predicts the direction that the asset will take. Only two possible outcomes are possible and it does not really matter as to what the asset’s price is. All that matters to the trader is whether his prediction is right or wrong.
Binary Options platform, a real-time web-based trading arena, enables traders to make profits through short term predictions as regards the price of some underlying assets by buying the asset’s binary options. Since 2008, Binary Options platforms are seeing rapid growth and as of 2012 approximately 90 such platforms are in operation. These platforms offer short term binary options that are standardized and profit or loss that is pre-determined, but they cannot be liquidated prior to expiry. Typically, Binary Options on as many as 70 underlying assets with a profit range of 61% to 85% that expire in the money are offered by these platforms. They also offer weekend trading wherein the payouts could be as high as 400%.
Knowledge about the stock market is not essential to conduct trades on a Binary Options platform. The trader just predicts whether an underlying asset’s price will finish higher (Call Option) or end up lower (Put Option) as of the expiry of the Option. Binary Options are generally offered for about sixty minutes, but are traded till 10 minutes prior to expiry.
On the trading platform, the spot price of an underlying asset is set by the trader as the Option’s strike price. If the asset’s price goes up and finishes higher than the strike price, the Option expires in the money. If there asset’s price does not change at the time of expiry, the investor will get his/her money back. If the Option expires out of the money, the investor/trader gets a rebate of up to 15% on the investment.
Generally, a Binary Options platform does not levy any fee when the investor buys an Option. They make their profit based on the difference between the Options expire in and out the money. However, most platforms specify a minimum of investment which may be as low as $10.
In order to become successful in Binary Options trading, it is important to select a simple, reliable and professional Binary Options platform. Here are seven tips that can help you to identify the best suited platform for yourself.
Seven Tips On How To Choose A Binary Options Platform
#1: You should trade Binary Options only on those platforms that offer a return of at least 65% to 70%. One major advantage when it comes to Binary Options is the determination of the payout in advance. Irrespective of whether the underlying asset’s price movement is huge or small, a Binary Options contract will provide a fixed return to you.
#2: You must choose a Binary Options platform that promises a payback if an Option expires out of the money. You may have to scout for one as there may not be many platforms that promise a payback if the asset’s price ends lower than the strike price on expiry of the Option. However, there are some platforms that offer a discount of up to 15% on investment.
#3: It is a good idea to select a platform that extends support to many currencies. As an online trader, you may feel more comfortable if you can trade Binary Options in your own currency. Moreover, the very fact that a Binary Options Platform supports varied currencies indicates its stability as well as international presence. It is better that you stick to a digital platform that supports at least the USD, Pound Sterling and Euro.
#4: It is important to make use of a platform that employs strict security measures. Encryption is the most important element that makes any Binary Options platform safe for you to use. You must select only an options platform that makes use of a 128-bit encryption offered by a leading security provider. This is the only protection that you have against online identity theft. You must also study the security section of the platform and ensure that it prevents unauthorized access into your account, backs up all the transaction data on a daily basis and is committed to a 24-hour maintenance routine.
#5: You must ensure that the Options platform allows you to withdraw your money at any time you need. It is a good idea to check the withdrawal policy of the platform that you are considering for your Binary Options trading. You must find out whether you can deposit as well as withdraw your money at any time and at your convenience. It is very important to stay clear of platforms that specify a waiting period for withdrawal or accumulation of a specific amount of earnings from Binary Options trades.
#6: You should confirm that the Options platform that you are considering to use provides good customer support. It does not really matter whether you are a beginner or seasoned options trader, easy access to customer support is essential for successful online digital options trading. Ensure that the platform is offering telephone as well as email support.
#7: Finally, it is important to judge the fairness of a Binary Options platform before deciding to use it. The points that are to be taken into consideration are as follows:
- Whether the trading volume on the platform – high or low
- Whether the price quotes offered are from reliable third party data providers
- Whether same price quotes are offered without spreads for buying a call or a put option on an asset base, strike price as well as expiration time
- Whether the platform’s exposures are managed correctly
- Whether withdrawals by clients are normally finalized in two to three business days
Binary Options is not similar to conventional options trading which are highly leveraged and subject to volatility. The degree of success and loss are fixed in Binary options and they do not change. Therefore, the key to success is selecting the right Binary Options platform the key to success.