In a very short period of time, binary options trading has become one of the most interesting and popular ways of making money online. This is because it is simple and provides high returns even on small investments, especially for day traders. In binary options trading, there can only be two outcomes. Your prediction as regards the price movement of an asset can only be right or wrong. Therefore, they are referred to as all or nothing options.
Make Money Online Quickly With Binary Options
To put it in a simple fashion, binary options trading is a contractual agreement wherein meeting a certain condition or movement of the price of an asset in a predicted direction entitles the trader to receive a fixed amount of returns, depending on whether the option contract expires “in the money” or “out of money.” As with anything else in life, risks and rewards are also part and parcel of binary options trading. However, the good news is that you will be aware of the risks involved and the rewards you can get even before you buy a binary contract.
Further, you are not required to predict as to what the correct price of the asset will be by the contract expiration time. You become eligible for profits even if the price of the underlying asset has moved only by a fraction of a point in the predicted direction. If you are an experienced trader and you want to quickly make money online by trading binary options, here are some suggestions:
#1: Choose the Most Liquid Assets for Trading
It is a fact that binary option is not only easier to trade, but also far less complex when compared to forex. To invest in a binary option contract, all you need to decide is whether the underlying asset’s price, at the time of expiration of the contract, will be:
- Higher or lower than the Strike Price (High/Low options),
- Within or outside a price range (Boundary options), or
- Touch a specified level or not (Touch/No Touch options).
- Whatever be the trade type you are comfortable with, always go for options in most liquid assets.
#2: If the Market Has Moved, Trade in the Opposite Direction
What goes up has to come down. However, you will have to judiciously choose the trading instrument and time your trade to suit the market conditions. Binary option trading is appealing to the masses because of its predictability. The contract period and payout information are made available beforehand. In forex or stock trading, this is not the case. You cannot determine as to when you should “cash in” and what return on investment you will receive.
#3: Quality is Less Important Compared to Quantity
In order to quickly make money through binary options trading, you should focus on quantity and not quality of trade. This is to say that you must make use of the aggressiveness of the retail investors which often moves the markets. In fact, binary options trading is more beneficial if you execute a number of trades instead of carrying out a few quality ones. This is because you don’t have to be worried about the amount by which the price of the asset moves. You only have to predict the direction of in which the price moves.
Hedging offers one of the easiest and simplest ways of earning money through binary options trading. This is to say that you must hedge your binary options contract, either fully or partially, if the price of the underlying asset moves in your favor before expiration of the contract period. This would help you to at least book the current returns.
Strategies to be Employed for Making Money through Binary Options Trading
The answer to the question as to whether you can make money through binary options trading is a yes. However, it calls for some effort on your part. You need to learn to manage money well, take advantage of change in market conditions at the time of release of news or events, read charts and use indicators. If you treat is as a hobby, then you will earn much from binary trades. You may even lose money. You need to treat binary options trading as your profession.
Every year during the period September to October, Apple releases a new model of iPhone and some other products. You need to keep track as to when this is happening and add it to your trading calendar. One or two days ahead of the event, you can buy a Call option on Apple stock. You can be 99 percent sure your prediction that the price of Apple will go up during this period. Historically, Apple’s price has always increased after the launch of a new product.
There are other large companies as well, including Google, Samsung, Microsoft and Sony. You just have to keep track as to when these companies are launching new products and mark off in your calendar. All these releases present you with opportunities to make money.
Once you are comfortable with long-term trades, you can work on short-term trades. You may not be able to use news and events releases for short-term trading as variations often happen too fast. Therefore, you need to learn to use the charts and determine trends, which are predefined patterns in price movements in the short term. You have to catch the pattern as it develops, if you want predict the direction of movement of the asset’s price. This is a slightly more complicated strategy, but it helps you to make money by trading binary options.
Actually, the best way to make money is by employing a combination of both the strategies. Further, it is legitimate way of making money online because many countries have started or already implemented a regulatory framework for binary options trading platform providers. They include the United States, Cyprus, Japan, the United Kingdom and South Africa, among others. Finally, you are not required to be a business or financial expert in order to trade binary options successfully.