How to Trade Binary Options: A Beginner’s Guide

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The political and social events of recent years have caused the global economy to falter. In addition to the ongoing COVID-19 pandemic, the war between Russia and Ukraine is now affecting the world’s economic balance. We are heading for catastrophic inflation, which will cause the value of money to plummet to unimaginable depths. Furthermore, although salaries remain the same, food prices and the cost of living are rising steadily. However, binary options can help combat that.

Consumers who do not take care of their own reserves and do not find a way to invest their savings wisely will suffer great losses in the long run. Since the real estate market is heavily loaded, a large number of private individuals are turning to the stock market. Binary options promise high profits, if one knows how to proceed. In the following article, we introduce you to the world of binary options and show how trading the financial derivative works.

What Are Binary Options?

Behind the term “binary options” hides a financial instrument with which speculations can be submitted quickly and easily. Forecasts are made about the fall or rise of the price of an asset.

For example, guesses can be placed on the share price of Amazon or the price of Litecoin. They can be predicted or the USD/€ exchange rate can be scrutinized. Since the time span can be up to one minute, traders are able to trade with binary options countless times per day. The speculation is given in the form of yes or no answers, which explains the name “binary option”. Conversely, this means that there is a 50% chance of profit and loss.

Another advantage is that there is one hundred percent transparency about the potential profits. As a rule, an increase of 70-95% is possible. This means that a credit of $1700 – $1950 is possible with a stake of $1000. As a result, risk management is relieved and trading decisions can be made more easily.

Step-by-Step Guide

Trading with binary options as a beginner can be very confusing. For this reason, it is advisable to open a binary options demo account. Most brokers provide this option to help beginners. In this way, brokers increase the likelihood that potential customers will enjoy trading and make regular speculations.

For the beginner this offer is worth its weight in gold. With the help of the demo account, the platform can be explored and tested. A suitable strategy can be developed without immediately putting one’s own assets at risk.

After this taster, you can start trading binary options. This is how you proceed:

  • Broker: The first step is to choose a suitable broker.  It is advisable to choose a reputable, well-known broker to protect yourself from fraud.
  • Market/asset value: traders are spoilt for choice. They have to choose the right financial product from a long list of assets. For example, they can choose from cryptocurrencies, indices, commodities, foreign exchange or shares.
  • Size: A sum must be defined that you are willing to invest. But remember, if you bet on the wrong horse, you will lose 100 per cent of your trading amount.
  • Expiry time: The expiry time must also be determined. A range between 330 seconds and one year is possible.
  • Call/put or buy/sell: The designation of the buttons depends on the broker.
  • Confirmation: In the last step, you should check your details extensively. Some binary option brokers have set up the option to view the information again before trading. However, it is better to be safe than sorry. If everything is correct, the trade must be confirmed.