There is no simpler way to profit from asset price movement than binary options trading. The fundamental trade type requires only that the trader be able to accurately predict whether the price of an asset is going to rise or fall from the strike price within a predetermined time period. Accurate forecasts lead to large profits, while unprofitable positions lead to the loss of the exact investment amount as decided upon by the trader.
The first step to trading will be to select an asset to trade with. Currencies, stocks, commodities, and indices are all available within binary options platforms. The goal is to select an asset that is going to render price forecasting easy. For example, selecting a stock just after a positive or negative earnings report has been released in relation to it. Throughout each day there will be specific assets that offer up easier profits.
Next will be the selection of an instrument that matches the current price action. There are binary options trades for every type of price movement. With upward or downward movement, Put/Call, 60 Seconds, Long Term, and One Touch can be selected. For side-to-side (ranging) price movement, Boundary, No Touch, or Range trades can be selected. The point here is that no matter what the price behavior currently is, there will be an instrument that can be used to profit from it.
The selection of an expiry time comes next. This is an important selection due to the fact that the asset price must be in the predicted position when this time period is over. Many binary options traders now prefer short-term trades because they make analysis easier. It can be must easier to forecast price direction more accurately over the next few minutes than the next few days. Even so, Long Term trades should not be overlooked, as they can be used for hedging and providing boosts to overall profits along the way.
The last decision will be that of the investment amount. This too is an important decision because this will be the exact amount of money that will be lost should the incorrect selection be made. A strong money management plan should be in place so as to steer clear of unwise investment decisions. The good news is that most platforms have very low minimum investment requirements. During times when the markets are volatile, smaller investments can be opted for. Alternately, during times when conditions are easy to read, larger investments can be opted for.
The risk to reward ratio in binary options trading is very well-balanced. With each decision, traders are able to place themselves in a better position to receive the offered return rate. The best trades are those which are planned in advanced, with the planning process including some analysis of the current and past price movement of the asset. Market news and price charts can be used to determine how and why an asset price in behaving as it is, after which this information can be used to rake in the profits.