Binary options are one of the most influential and simplest ways to make money as a Forex trader.
Knowing how to use them will allow you to spend less time on opening positions manually and more time analysing the market and making money.
How do Binary Options work?
Binary options trade has been around for quite some time now, but they have become more popular due to growing interest amongst
Forex traders who want a shorter-term strategy are used alongside their usual longer-term strategies.
Binary options attract many people due to being very predictable – it’s either YES or NO when it comes down to it – if your prediction is correct, then you will win. If it’s wrong, then you lose.
A binary option can be thought of as a bet that’s placed on whether an asset will rise or fall within a specified period.
Binary options are advantageous when making shorter-term decisions regarding Forex trading because you can open and close your position in just minutes, rather than the hours necessary to manually do what would be required.
Binary Options in Forex Trading
The market is one of the best tools for binary options – it is what they are based upon, after all. When you’re looking at an asset that you want to trade with binary options, then take note of its current price against what other assets are doing at the same time – this gives you an idea if it’s going to go up or down overall.
This applies similar to a coin flip – your prediction can either be true or false. If you pick heads and tails, you are correct and will win 1 point (if there were 1point for this binary option). If you pick heads and it comes up as tails, your prediction is false, and you will lose 1 point.
Which options can I take?
There are several different types of binary options available to choose from:
Up or Down (Low or High)
Typically used to predict the price movement of a commodity such as gold or silver, e.g., $40 Up to $80 Down, there will either be an increase in the value or decrease in value by this amount once the option has settled.
Used to determine whether a specific target price will be hit before expiration, e.g., The price of Gold Will Touch $1000 With00 levels available for the trade), if it flips tails, then you lose one point (or all points) on that position.
These numbers can vary depending on where you choose to trade; some websites use points as low as 5-10 points per trade, while others use 100+. The amount of points used does not affect how the trades work, only how much money is at risk when trading.
It would be best to choose which way the market will go – Up or Down or Touch/No-Touch.
You can do this at any time. Once you have made your prediction, wait for the market to close and see if you were correct.
If you were right with your prediction, you make 1 point (or all the points that are available in that trade)for each point in that particular binary option.
Sometimes it is beneficial to place an option on more than one asset – this allows you to increase how many points are at risk and increases your chances of making a significant return when picking correctly!
The good thing about binary options is that, unlike other markets, which can take several hours for an asset’s value to change, due to how quick it is, you can bet on the same option more than once – potentially doubling your profit. If you pick correctly!
Binary options trading also allows traders to use leverage (that means borrowing the money) to multiply their returns on investments which is excellent news for inexperienced traders looking to get into the market.
New traders forget to choose assets that move in the same way- it is not recommended to choose two different assets that don’t change simultaneously. However, if you are using leverage, then this increases your risk but also your potential rewards!
It’s all about finding a balance between how much money you can put on the table and knowing what you are doing. The critical point here is: do not lose what you do not need.
Once you’ve chosen your binary options and whether or not you should leverage them (this means borrowing the money), pick an expiry time and click on place trade.