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Monday, August 26, 2019

The Five Steps to Trading Binary Options

Posted by admin on December 21, 2012

While broker platforms differ to some degree, in general you can place a binary options trade in just 5 quick and easy steps no matter what broker you trade through. The only requirements are that you set up an account and fund it according to the broker’s guidelines. Let’s get trading shall we?

Step 1: Choose your trade type. This will be something like a one touch option or a high/low option and sets the conditions for a winning trade. In most cases the trade types are shown as tabs on the trading page. After making the trade type selection move on to step 2.

Step 2: You will now choose your asset class and underlying asset for the trade. These are typically tabbed, just like the trade types. You must choose the asset class first (stocks, indices, currencies) and once that is done you will have access to the underlying assets. Choose one and move on to the next step.

Step 3: Choose your expiration time for the trade. On most platforms this will be a dropdown list that shows all the available time frames. Several choices are typically available and they can range from 15 minutes to a year in some cases. Most traders stick with the shorter time frames to maximize their trading opportunities and profits.

Step 4: Choose the amount you are going to invest in this trade. Most brokers have minimum requirements and your trade amount must be at least this much. Your profits (and losses) will be determined by the amount you risk on each trade. It is good to have a money management system to help determine the optimal amount to risk on each trade.

Step 5: Choose between high and low (assuming you are using a high/low contract) or other variables and press the “Buy” button. Now you only need to wait for the expiration of the contract to collect your winnings.

Some traders like to watch the movements of the underlying asset while they wait for their option to expire while others will move on to other things and only check after the option has expired. There is no reason to watch the price movement, unless you are trading through a broker who allows for early closure of your trades. Some traders like to close out their trades as soon as they are in the money. This provides a lower payout percentage, but it also provides protection against the trade moving against you while waiting for the expiration of the option.

At the end of the day it is your decision on whether you want to watch your trades as they progress and close them out early if they become profitable.

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