Any time of the day or night, on any weekday, anywhere in the world, you will find people hovering over their computer screens trading Binary Options & Forex, i.e. buying and selling foreign exchange currencies in what is the largest market on the globe by a factor of ten. More than $3 trillion changes hands every day in this market.
If you have ever wondered what the world of Digital Options is about and whether you should learn more about it, then read further. You’ll learn a lot, and before you know it you’ll be opening an account and buying and selling currencies from countries all over the world. Of course, such a highly volatile market is not for everyone, but it is something that everyone should know about since it is such an important part of the world economy.
Options Trading Offers Viable Opportunities
The world of Binary Options is exciting and moves at the speed of light. Opportunities abound to make and lose money within minutes, so it is definitely not a pastime for the faint of heart. One thing is for sure, if you trade on the FX you will never be bored. Ten times more trading activity occurs in this market than any other market.
It’s a high stakes environment, although you can get into it for a surprisingly small amount of money.
The basic concepts of online options trading are simple. Before you do trade you should make some effort to understand the global economy that lies at the basis of all foreign currency exchanges.
First, let’s talk about what is involved in placing a trade. You can trade on virtually any of the world’s currencies, whether it’s the Euro, the Yen, the Dollar (in its various U.S., Australian and Canadian guises) or the British Pound. The pairs different currencies in something called “twins,” and which might include U.S. Dollar/Swiss Franc or GBP/JPY.
The engine driving the foreign exchange market is made up of the international banks and corporations, although the individuals (like you) are able to participate in it because currency brokers and dealers offer contracts that individuals can take part in. Most traders who offer options for trading FX specialize in such trading, although that is not always the case.
1) Find a Binary Options Brokerage. Many are out there. The best way to choose one is to do some comparison shopping and due diligence. Find out how much a minimum deposit is, how large trades are and how does the trading system work. Some trading platforms offer downloadable software, while some are based on the web. It’s up to you.
2) Open a trading account and deposit the initial amount of cash. Fund it only with as much money as you are prepared to lose comfortably. If you are starting a new account, pick one that allows 10,000 unit trades and which have a minimum account balance of up to $500.
3) Become familiar with the trading program you chose. As mentioned before, online options trading involves the relative value of currency pairs. Each pair has a bid and ask price which alters as the market changes. Traders sell at the bid and purchase at the ask.
4) Pick currency pairs that you know something about and that you think will move in a certain direction. Traders spend a lot of time poring over financial news and reading about factors that can affect currency values. Binary Option traders use a currency pair no matter which currency you think will go up.
5) You place an FX order by pick Bid/Sell or Ask/Buy on the screen of the trading platform. The margin requirement is how much money you must have in your account to make an order.
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