Binary options have become extremely popular in the last few years. There is no need for a trader to be a financial wizard, as he only needs to predict either a rise (call) or fall (put) in the value of a chosen asset.
This is the best way to dive into binary option is to choose a good broker, and luckily for you, there are many platforms, such as tradingbinary.co.uk that listed the best ones with all the information that will help you make a decision.
Minimising risk levels
While there is no need for an extensive financial background, it is best the future trader is familiar with the asset they are about to predict the value of. As with everything in the world of finance, there is a certain amount of risk involved.
Here are a few pointers that, taken into consideration, will help you minimise any potential risk:
- Do your homework and review all dynamics of your trading before you invest
- Do not invest all your capital in one single shot. It is best you break your investments in smaller amounts.
- At least at first, only invest 5 to 10% of your equity per placement
Binary trading will allow you to trade anything from precious metals to shares and everything in between. However, you should only focus on one single asset at first, until you become familiar with the process. After predicting to become easier, you could always extend your portfolio.
Here is a list of a few strategies that will be of great help if you are considering venturing into the world of binary options :
- The trend strategy This particular strategy is currently used by everyone from fresh faces in the financial world to seasoned traders. It involves monitoring all changes in the trend line of the chosen asset. If the said line is flat, a ‘no touch option ‘ is recommended. Of course, if the trend line shows that the asset’s value is going to rise, a ‘call ‘ option is necessary, and if it shows the value will go down, you should choose ‘put’.
- The straddle strategy If the market shows certain signs of volatility, it is highly advised you applied this strategy. It basically means that a trader should avoid selecting either ‘call ‘ or ‘put ‘, and just put both options on the asset. This strategy is used particularly when a certain asset is really volatile and there is no secure way of predicting a value after important news regarding the asset has broken on the market. It could go either way.
- The hedging strategy The short explanation of this strategy is to use both the ‘put ‘ and ‘call ‘ options at the same time and on the same asset. This goes a long way of protecting your investment and minimising any potential risk, whichever way the market will go.
- The risk reversal This particular option is extremely used especially by seasoned traders across the world. By placing both ‘call ‘ and ‘put ‘ on an asset is beneficial when its value is always fluctuating. This way, one of your options will have a positive outcome leading to a profit.
- The fundamental analysis This strategy best works if you are trading in stock values. By doing your homework and gaining a good understanding of your chosen asset, you will have a better chance if doing accurate predictions. Either chooses an asset you are familiar with or just prepare to read everything there is to know about the chosen to the company and the market, from earning reports to financial statements.
So, chose a good broker from a platform like TradingBinary, pick an asset and begin strategies.