Trading Binary Options

– combining theory with real time trading examples –

 

Binary options are one of the most traded forms of options nowadays as in the last years the markets related to these products exploded in an unprecedented diversity of brokers that are offering such a product. The reason behind this phenomena is two folded: first, binary options are simple to understand and to trade, the rules being quite straightforward and easy to apply, and second, in order to trade binary options one needs mainly technical analysis designed for short term trading (scalping), because binary options are traded more than 75% on a short to very short term horizon. That makes a quick potential profit and this is appealing to traders all over the world.

According to Wikipedia, in finance a binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all. In other words, if you are right in your assessment and the price will go in the direction you pointed, you are going to receive at the time the binary option will expire a fixed amount you agreed upon at the moment you decided to trade the respective binary option.

The purpose of this educational series dedicated to binary options is to provide you with a guide about what binary options are, trying to present them in such a way that it is easy to understand and in a friendly manner (dealing with terms like in-the-money and out-of-the-money concepts, what types of options are there, what is a call, what is a put, difference between regular options and binary options, etc.), then in the second part to show you how to prepare the trading ground for such a product (being mainly short term trades we will focus on short term analysis like five min, hourly and maximum four hours chart, oscillators to be used, moving averages, patterns, will take into consideration the fundamentals, the economic calendar, etc.) and in the third part the focus will shift on how to actually trade binary options and what to take into consideration.

I will present a lot of examples based on real time market conditions and will show you step by step how to effectively trade such a product. I hope this educational series will open the appetite for trading binary options, because this project is mainly introductory, because advanced trading techniques can also be applied when trading binary options. But this will most likely be the object of another educational series. Until then, let’s take things step by step and let’s see what binary options are and what to take into consideration for successfully trading them.

Mircea Vasiu