American Binary Options – A Simple Investment Tool

October 2nd, 2010

Those, who are trading in the equity market since years, would have thought of a simple way of trading every now and then. For a salaried person, trading in the stock market was a distant dream. Anyone, who wanted to trade in the financial market but would sit quietly thinking the huge amount that has to be invested for trading, can now trade in binary options. For those, who could not invest huge amounts, trading binary options are like a dream come true. For trading in the financial market three things were needed, money, time and expertise. Binary options can be traded minus these things. Even a new trader can trade these options without having much money knowing only the basics of the trade. And what more a trader can expect because binary options offer quick results.

American binary options are a new way of trading where an average person can also enjoy trading spending only few hours in the trading and making great money. Now there is no place for fear of losing hundreds of dollars and spending days and weeks to gain profit. The concept of binary options is new to US but in other parts of the world they are already popular.

How American Binary Options Work:

American binary options have become popular because they are a simple way of trading. They are short term options that give prefixed payout over a fixed period future. If traded with good strategies, binary give excellent rewards. While trading binary options, you only predict the direction of the in which the option may move. Binaries can be traded in commodities, indices, stocks, and forex.

American binary option trading is a simple investment tool because:

  • You exactly know your profit or loss at the time of the contract.
  • You do not buy any shares but predict its direction.
  • You can start trading with a very small amount which can be as little as $100.
  • Profits are prefixed regardless market’s movements.
  • They offer only two possible results – ‘in the money’ or ‘out of the money’.
  • Online broker do not charge any fee for the transactions.
  • Binaries are considered short term options as they give very fast results. The maturity time sometimes can be less than one hour.
  • Only little bit of research can bring wonderful results.

In short, this is a simple tool of trading that can bring large profits. A successful trade can give you 75% to 85% profit multiplied by your investment. but don’t forget the potential loss also because that can also be big. An incorrect decision can lead to tremendous loss as binaries do not offer anything for an unsuccessful trade.

Where to Start:

Since American binary options are now available online, many platforms have come into existence.  Find out the one that can provide you the assets you want to trade with. Different platforms give different payouts. So, it becomes important to find the one that gives maximum returns and also, some platform give back 15% of the invested money back to the trader if the option fails.

Strategies for Trading American Binary Options

October 2nd, 2010

One can earn substantial profits by using various strategies in binary options trading. By trading binary options, one can gain money by predicting the direction of the price of a certain asset over a certain period. Binary options do not offer varied profits or loss to the investor depending on the performance of the asset. In fact, they are those bets that can be either correct or incorrect. The profit or loss of the investor depends on the degree of correctness of the speculation he made. There can be numerous strategies to make binary options successful and some of them are as follows:

When a trader finds out that his prediction about a particular option is not going in the direction, he always can hedge his option by choosing the other path. It will decline his loss up to a certain extant. A trader can protect his profits by purchasing a binary option that can earn him profit if the price of the option declines. For example, you purchase a security expecting its price will go high. But it starts dipping and you find yourself in a difficult situation where you can loss all your money that you have invested in the option. In this scenario, traders like to buy the stock with the opposite price. As your option price can increase in a movement, this strategy will act as an insurance of the option where your option faces a decline in its price. In order to hedge the option, the investor may pay a small amount and can get rid of all the worries.

There are some investors who purchase a binary option with regard to the stock performance but activate the option only when the asset witnesses a considerable rise. Investors may get excited seeing the rise in the asset but profit can be listed only with good strategy. It is not advisable to sell the shares in this type of situation; instead the trader should hold the shares and wait for further price rise for good profit or buy a binary option. It enables him to make capital gain even if there is no further rise in the price of the asset.

Binary options are also known as ‘all or nothing’ option depending on the predicted movement of the underlying security. So, in order to earn profit what a trader is supposed to do is to analyze the situation and make the prediction accordingly, although any dramatic movement in the price will not affect the result of his prediction. It refers to that binary options do not face much instability.

Investment in less number of binary options, do not bring desired results. If you want to earn good money, you must invest in more than one option so if an option does not bring profit, you will be able to balance the loss by earning profit with other options. A group of options can be purchased to make handsome profits. These fix-return option can prove fantastic if bought in bunches.

How are American Binary Options Different from Traditional Options?

October 2nd, 2010

Binary options are those options that offer a fixed return or nothing at its expiry if certain conditions are met or not. The profit or loss is fixed at the time of the contract and that is why they are known as ‘all or nothing’ options or fixed-return-options as well. They are also known as digital options and the trader just has to predict the price of the option whether it will go high or low. They are popular as one of the simplest method of trading where the investor knows his potential gain or loss. It comes under the category of simplified trading tools which is getting popular very rapidly among the traders’ community. There can be only two possible results hence they are named ‘binary options.

Binaries are popular as that financial trading tool that enables investors to enjoy the flexibility of the trading which can not be enjoyed in traditional trading due to complexities. If you are trying to get profit through this short term trading pattern or you hedge your option, both ways binaries bring high payouts within a short period of trading and this is the reason binaries have got worldwide popularity.

In American binary options trading, you can trade a wide range of assets such as commodities, stocks, indices, and currencies. Whether the investor chooses a call or a put option, if the contract at its expiration ends successfully means the prediction of the investor comes true, the option is termed as ‘in the money’ and if the options goes against the decision of the investor, it is termed as ‘out of the money’. If the option expires at the strike price, it is termed as ‘at the money’. Usually, a fixed cash payout is settled which is according to the invested money but it depends what is predetermined in the contract.

There’s lot of similarity between binary options and vanilla options, in that the payoff in case of both options depends on the rate at which the underlying asset expires. However, in case of binary options, you simply need to take the direction of the price movement into consideration unlike traditional options where you also take into account and make an estimation of the magnitude along with the direction of the price movement. Another important difference between the two options is the extent of potential loss and gain in a contract. In binary options the potential gain or loss is known to the investor beforehand while in traditional trading you never know the results.

In American binary options, once you have placed to bet, you can sit peacefully and there is no need to sit before the computer waiting for the results to come while in traditional trading an uncertainty always lingers on and this can be real test of patient. Unlike traditional trading, binary option does not demand a huge investment and this simple trading tool has encouraged both new and middle class people towards trading. Those, who did not want to invest in the financial market for the reason of losing, can now enjoy trading American binary options.

Various Forms of American Binary Options

October 2nd, 2010

Trading markets are considered to be very unstable, sensitive to market, and volatile, but since then also more and more people are getting themselves engage in trading world. This is due to the fact that if your prediction sets right there are chances that you can make some good amount of money with just a little risk. Although the trading markets are unstable even then a little change in them can lead to higher returns. Nowadays, American binary options are considered to be one of most beneficial options which offer a fixed rate of return over a very short period of time. Trading binary options provides many benefits in various different ways. Some various forms of American binary options that a trader can make use of are listed below:

Cash or Nothing Binary Options: The most widely used binary options are “cash or nothing options”. They are one of the easiest and simplest types of options which a trader can opt for dealing. Under this type of options the trader or the investor has to predict that whether the value of the asset will fall or rise within a given time period known as expiration date. There are two types of options from which you will choose either one to predict your price of the asset. They are known as “Call” or “Put” options. When a trader expects that the price of the asset will rise in the future then he is choosing “Call Option” and in case he expects the price to fall in the near future then he is opting for “Put Option”. In such case you receive a fixed amount that ranges around 75% when your prediction sets right.

Asset or Nothing Binary Options: These binary options work almost on the same principle of cash or nothing options. The payout in asset or nothing option is not fixed rather it is decided by the fluctuations in the value of the underlying asset. There is no need to undertake a contract on the underlying asset, but you can directly view the asset being paid on expiry.

No Touch and Touch Binary Options: Often known as lock digital options provides the payout when the underlying asset crosses a target price. In case of ‘Touch’ binary option, a trader has nothing to do but decide and see that the value or the price of the asset touches or reaches the exact end price. In case of ‘No Touch’, the trader has to decide and see that the price of the underlying asset does touch the target price from the purchase time to the expiry of the option. In simple words, the return will be yielded only when it touches and not touches the target price.

Double No Touch and Double One Touch Binary Options: They are known as range binary options and are not widely traded i.e. they are just available with certain brokers only. In case of these binary options the return in the underlying asset is concluded not on the basis of single price but on two different types of specified prices.

Evaluating American Binary Options

October 2nd, 2010

Just two years back, binary options trading started in the US. Trading binary option are usually popular for giving high rewards but just with a wrong prediction all your investment can go down the drain. No doubt, some of the traders have made good money but there are people who had to bear big losses as well. It is a common thinking that binary options are simple to trade and even new people can also try them but the question is should you or should you not try this type of trading. Here are positives and negative aspects of binary options trading that can help you in finding the right answer:

The Positives

Huge Potential Profits: Binary options are that unique way of trading that offer huge profits investing small amount. An option that ends with the term ‘in the money’ can give you a payout of 75 to 85% more than the actual investment.

Short Term Options: Since binary options give very quick results, they are known as short term options as well. Sometimes the result comes only in one hour or so and this is also one of the reasons that investor enjoy trading them. They can also be traded for a day, a week or even a month.

Guaranteed Results: In binary options one is assured of result. The potential loss or profit is known in advance. This feature helps the traders to analyze how much money they should invest and also how to make the returns more profitable.

Simple Way of Trading: The overall simple way of trading, attracts new traders as well. For them it has become the first choice for trading because they already know the involved risk and can start with small amount. Moreover, it is easier to analyze the stability and profitability of short term options.

No Commissions: Mostly all the reputed platforms do not charge commission on American binary options trading. It is a big thing for all those traders who are investing small amounts.

Small Investments: All the online brokers let you start binary trading with minimum investment that can be as low as $30 to $50. Beginners find it very attractive as they don’t have to put large amounts when they are learning the steps of predicting directions.

The Negatives

Probability of Large Losses: With the large profits come the large losses and it exactly is the nature of binary options. If a successful trade gives you 75 to 85% of return, a failed trade gives you nothing at all. It is not easy to swallow, so it will be wise to invest small amounts.

Quite Risky: To predict in which direction the asset will move, is not an easy job even if it is only for one hour. This feature makes binary options quite risky.

Limited Number of Assets to Trade: Compared to vanilla options or to the traditional trading, American binary options offer a very small range of assets to trade. This can be little disappointing for those who trade heavily in the financial market.

Simple Ways to Make Money with American Binary Options

October 2nd, 2010

Binary options trading is the simplest way of trading in the financial market. In binary options, the traders don’t have to buy the shares of any company but predict the direction of the asset for a fixed period and the after a positive outcome, the investors get a prefixed payout. There can be only two outcomes with defined two terms ‘in the money’ and ‘out of the money’. If the option ends with in the money, the trader receives a predetermined payout and an out of the money option does not give the trader anything. The beauty of binary options trading is that you already know the potential profit or loss which enables you to preplan your option. This is one of the reasons that binary options are becoming a popular method of trading all over the world.

American binary options seem to be a simple tool of trading but they are quite risky as well. Since the profit or loss is fixed, any volatile or other movements in the market do not affect the result of the options. One more thing to realize is that you don’t have to predict the exact price of the option because if the price of the underlying security surpasses the strike price even by a cent, it is considered ‘in the money’. An in the money option can give you 65 to 85% profit multiplied by your investment but on the other side you can lose all your investment if the trade is not successful. So, a right prediction at the right time and good analysis of the market are also important to turn your trade in a positive result. In order to make your option more successful, you can take the help of the following tips:

While selecting a security for trading, look out for the companies that are declaring good dividends and positive results. Usually, it is a trend with the market that if a company is showing good figures and the shares of that company are rising, there surely are chances of earning good profit. Therefore, choose these companies where the chances are better.

In order to list good profits through American binary options, buy the options in quantity. Even a company that is small can give good profit if the assets are bought in bulk because binary options give reward with a slightest change in the price.

Another way that can prove profitable is hedge your option. If you see that the option is not touching the predicted price, you can hedge your option and that means you can but a put option without spending any more money. This way you will narrow your loss and chances are that this way you may list some profit as well.

If a company’s prices are rising very fast, don’t get disheartened because you can trade in the opposite direction. If the prices of a company rise very fast there are chances that there will be decline near the end of the trading. So you can buy a put option and earn profit when the security shows decline at the end of the day.

Why are American Binary Options Called Unique?

October 2nd, 2010

Binary options trading have become the most preferred trading tool because these options are quite easy to understand. If you want to trade binary options, just having the knowledge of basics of trading is more than enough. Binary options are considered that unique method of trading where even new investors also can think of taking risks. If you are new to the market, you must be thinking why these options are called unique? The following points can clear the all the doubts about the uniqueness of American binary options:

American binary options offer a wide range of assets to trade with. You can trade commodities, stocks, forex, and indices with binary options. Trading different assets such as oil, gold, silver, NASDAQ, foreign currencies, etc are possible in binary options with the same simplicity that this trade offers to the investors. One of the safest features of binary options is that you do not buy any share of a certain company but predict the direction of the price of the underlying asset for a certain time and thus you are saved from investing huge amounts as in traditional trading. As binary options are now available online, they can be traded while sitting in the comforts of home or from any corner of the world. The profit in binary options depends on the performance of the asset over a specific time.

Binary options can be traded in two ways a ‘call’ or a ‘put’ option. There are two expected outcomes of the option, either all or nothing. Payout is fixed at the time of the contract and the beauty of the trading is that an investor already knows his potential gain or loss as soon as he enters the contract. If he anticipates that price of the underlying security will rise, he opts for a ‘call’ option or he chooses a ‘put’ option if he thinks that price will decline before its expiry. A ‘call’ option or a ‘put’ option, the investor gets his payout if his prediction is correct and the trade is successful but if the market goes in the other direction he gets nothing. This is the reason these option are known as ‘all or nothing’ options as well. Unlike traditional trading, you don’t have to wait for a major movement in the market in order to gain profit. A rise in the price even by a single cent gives you the full prefixed profit.

If you feel that your ‘call’ option is not going to the predicted direction, you can always but a ‘put’ option on the same trade without investing any more money. This way along with narrowing your loss, you can earn some profit as well. The best thing about binary options is that these options do not require a fortune to start the trade. You can start trading with investing a very low amount as little as $100 and can earn huge margin on your investment that too in one hour or so. Seeing all these advantages, you can say why American binary options are known as a unique tool of trading.

Benefits of Trading American Binary Options

October 2nd, 2010

The popularity of binary options is ever increasing from the time this new tool of trading has made its entry in the financial market. In binary options, the investor does not need to buy any asset but it is a contract between the buyer and the seller where the buyer predicts the direction of the price of underlying asset and the seller agrees to pay a certain amount if the conditions are fulfilled over a fixed period of time. One thing that a trader should keep in mind is that he only predicts the direction and can get his payout if the trade is successful but the magnitude in the price of the security does not effects the result. This type is advantageous especially for those who are new in the market and do not have much experience in trading.

The main feature of binary options is that they are easy to understand in comparison to traditional trading. The complexity of traditional trading system and huge amount involved in the trading would not allow small traders to trade but binary options have opened new doors for the novice investors. The risk involved is known to the investor and is very limited compared to vanilla options. Since, the investor already knows his potential loss and profit, binary options give him an opportunity to narrow his risks and maximize his profits. Due to this feature binary options have become a huge hit among the traders all over the world. Moreover, binary options are now accessible online and trader can trade from any corner of the world.

The other advantage of American binary options is that you need not to have a vast knowledge of options’ trading. Those, who have a slightest idea of the equity market, can trade with this new concept of trading. New and experienced traders both can now enjoy trading with binary options. If you have traded in the equity market, you must know the how the financial markets work. Binary option can be traded in any financial assets like stocks, forex exchange, indices and commodity markets. Let us take an example. Suppose you have in-depth knowledge regarding the prices of gold and factors that affect them. Then it would be very easy and lucrative for you to trade in Binary options in commodity market. Freedom to do trade at anytime and from anywhere is another big advantage of Binary options. You can trade according to your convenience.

The most important thing to keep in mind is that as a trader you must always maintain discipline in your trade and take trading very seriously. Although it may seem easy to trade in Binary option but, still you have to do your homework before you take a dive in financial markets. Simplicity can be deceptive at times as it may lead you to take trading in Binary option very lightly and take it for granted. This philosophy can be very dangerous as you may end up losing your hard earned money.

Making Money with American Binary Options

October 2nd, 2010

Binary options are the options that are traded predicting the price movement of the underlying security for a fixed payout over a fixed time. The trade totally depends on the prediction of the trader and he gets a fixed payout if the trade ends in the money at the time of expiration and an out of the money option does not give the trader anything and ha loses his investment.

There is no doubt that this style of trading is quite risky but than risk is part of all the trading tools. Unlike vanilla options or other forms of trading, binary results are not influenced with the internal or external movements in the market. The anticipation also depends on the situations that prevail in the market at the time of trading. The key feature of binary options is that it is not necessary that your must predict the exact price or you be right by 100%. Even a prediction that is right only by a cent will give you the payout that is decided at the time of contract. Here are some points that can help you in making more money with binary options trading:

1. Better to trade liquid securities: Experienced traders always look for the industries or companies that show positive results. The fundamental of the trade is that if the food companies are doing well and the trade is favoring a particular company, they are considered good for others as well. Therefore, choosing those companies that show good results on the charts will be a wise strategy.

2. Go for trading in the opposite direction if the market has already swollen: There is no need to panic if some particular company has touched the highest mark before you take a step. In this scenario, a trader should trade in the opposite direction. If you expect that the market will close at a lower price at the end of the day, you always can place a bet for that.

3. Don’t go after quality: Don’t be surprised, in this market quantity is more important than quality. In the financial market, over aggression demonstrated by the retail investors triggers the market and you should be able to take advantage of this situation. In binary options market, traders give preference to quantity because the magnitude of the price movement does not have any impact on the results; you only have to judge the direction of the price.

4. Hedging your option: In order to minimize the loss and make good profits, traders in the financial market occasionally hedge their options. If they feel that a certain price movement will turn into their favor before the expiration time, they partially or fully hedge their options. This is a type of guarantee that hedging would definitely turn into profitable trade.

Working on these points will help you to make money with American binary options trading. Binary options are simple tools of trading and can bring enormous profit if traded with a good planning.

Binary Option Assets

October 2nd, 2010

Traders usually like to trade different assets that are available in the financial market. An experienced trader has the ability to select the most profitable asset when it comes to trading. He should have the experience and he also should know the strategies that can make his trade successful. Although, binary options seem to be quite simple for trading, the basic knowledge of the trade and assets is very important. A wide range of assets in commodities, forex, indices, and stock, is offered while trading binary options. The wide range gives the trader a chance to place his bet on more than one asset. Coincidently, in binary options if you want to gain profit, you should place your bet on a number of assets simultaneously.

In binary options, you can trade four types of assets. It depends on you which asset you select for trading. They are as follows:

Trading forex or foreign currency binary options are traded in pairs and the EUR and USD are the two major currency parties that are traded the most. Which currency pair you want to buy decides the how much amount is needed for the trading. The currency you use to buy other currency is called the ‘base currency’ and the currency which is bought is called ‘quote currency’. It is obvious that with the improvement in the rates of the base currency, the quote currency also will show a rise. This scenario plays a very important role when currencies are traded at the international level and billions of dollars are at stake. This trading also improves the trading conditions in both the countries which otherwise would be possible only with the exchange of currencies of the said countries.

Index binary options are the second type of options that are also traded at the international level. Index indicates which group of stocks to be traded as it gives the traders more exposure to the securities that are traded through binary options. Trading index options can be quite risky as the performance of the index in the market depends a lot on the performance of the company. Some forces from outside the market may also affect company’s performance.

Stock options are another type of options that can be traded under binary options. They indicate the company’s worthiness that depends on the stock and shares it holds. It is advantage with binary options that the traders don’t have to buy the shares of the said company. Although, they can invest some amount in the company to become a part of it, in binaries they just have to predict the price direction.

The fourth type is commodity options where the commodities are exchanged with the commodities of other company. Products such as gold, oil, silver, and copper are traded under commodity options trading.

All the four assets are available in the US, Europe, Australia, Russia, and other markets of the world. As the technology has developed and binary options can be now traded online, the trading world has become a small place for the traders.