BINARY OPTIONS TRADING STRATEGIES
Binary options, also called digital options, are a novel type of investment vehicle that are rapidly becoming
a favorite among beginning investors because they have limited risk and are simple to understand. The most
popular type is the above/below or high/low binary option and trading is fairly straight forward:
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If you feel that prices will rise, then invest in a binary call option.
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If you feel that prices will fall, then invest in a binary put option.
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If you choose correctly, then you'll receive back your initial investment plus a return of as much as 75% of the
investment. If not, then 10% of your initial investment will be returned to you. For example, say that you
decide to invest $100 on a binary call option on Google. The price of Google at the time you buy the option is
$544.67 per share. When the binary call option expires, if the price of Google is above this price, then
you'll receive $175. If below, then you'll receive $10, meaning that the net loss will be $90.
Binary options expire in an hour, giving you the opportunity to earn as much as 75% over a very short time period.
And with binary options, the maximum return is earned even if prices move just one tick in your favor, so you can earn
this return even when markets are relatively tranquil.
Binary options trading is available on the popular foreign currency exchange rate pairs, select commodities
and even some of the more popular and active stocks and stock indices.
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DEFINITION
A binary option, like the name implies, has only two possible outcomes each of which pays out a fixed return
depending upon whether a certain condition is fulfilled by the time the option expires.
For example, a binary option that has percent payout of 70/10 means that, with an initial investment of U.S.$100, the customer will receive
$170 if the condition is met and $10 if the condition is not met. In the latter case, the net cost to the customer is $90.
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ADVANTAGES: Binary option trading
has several unique advantages. The payout and risk
of a binary option are known in advance and are fixed. The full payout is received even if prices settle just a little in the trader's
favor. When trading binary options, there is no margin required and no risk of losing more than the amount
initially invested. Binary options cash settle at expiration so there is no need to manually close a position.
Binary options trading is done live usually over a web-based trading platform that allows the investor to watch prices
on a tick-by-tick basis throughout the
life of the option. Finally, a customer can invest in a binary option for as little as U.S.$30 allowing the beginner to trade
with the thrill of actual money while risking very little.
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Free videos on binary options trading strategies:
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SPECIAL $300 BONUS
We worked out a special deal for our readers and got you a $300 free bonus upon opening your account.
All you need do is deposit $1,000 into your binary options account. Not spend. Just deposit.
Click to Open Account.
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RECOMMENDED STEPS:
1. Read the material on this web page and view the free binary options trade videos above. You can also read
our in-house binary options white paper.
2. Register for free. It's quick and easy and can
be done even when markets are closed. By registering, you'll have access to one-on-one educational support,
receive immediate notice of new system features and trading products and be eligible for any special promotions or offers.
3. Start with $30 beginner trades. For those who wish to start cautiously, you can select the minimum investment
level of $30 which represents the most that can be lost. This will give you the thrill of trading while risking very little.
As your experience builds, you can choose to invest as much as $1,000 per option transaction.
ADDITIONAL RECOMMENDATIONS:
1. For a general overview of alternative investing, request our free 2010 Trading Guide for Beginners.
2. An understanding of technical analysis can be very helpful when trading binary options. For this reason, we have
provided a free online tutorial on
introductory technical analysis.
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BINARY OPTIONS TRADING EXAMPLES
CALLS on EUR/USD
At right is an example of an above/below one-hour binary call option on the EUR/USD foreign currency exchange rate taken from
StartOptions.
The option has a 70/10 payout*. In the example shown, this option
started trading at 6:00 a.m. and can be bought at any time up to ten minutes prior
to the option's expiration at 7:00 a.m., after which time
a new option will be available for trading. The blue line shows the price history of
the EUR/USD exchange rate over the life of the option thus far.
The EUR/USD current price is 1.3529. If the investor anticipates that, at option expiration, the EUR/USD exchange rate
will be above the current price (the green shaded area on the chart), then
the investor will click on the green CALL button to invest in the binary call option that locks in the current price. After so doing, the
customer need only wait for the option to expire. If the binary call option expiration price is
above the customer's
locked-in price, then the binary call option will return the maximum payout, in this case, the initial investment plus 70%. If not, then
the customer will receive 10% of the initial investment meaning that 90% of the initial investment is lost.
PUTS on EUR/USD
At right is an above/below one-hour binary put option on the EUR/USD also taken from
StartOptions.
The characteristics of this option are similar to the binary call option in the example above but this time, the maximum payout
will be earned if the exchange rate falls.
The EUR/USD current price is 1.3529. If the investor anticipates that, at option expiration, the EUR/USD exchange rate
will be below the current price (the green shaded area on the chart), then
the investor will click on the orange PUT button to invest in the binary put option that locks in the current price. After so doing, the
customer need only wait for the option to expire. If the binary put option expiration price is
below the customer's
locked-in price, then the binary put option will return the maximum payout, in this case, the initial investment plus 70%. If not, then
the customer will receive 10% of the initial investment meaning that 90% of the initial investment is lost.
CALLS on BP SHARES
Trading volume in BP (BRITISH PETROLEUM) shares has surged since late April, 2010 as shareholders react to continuing news events and developments
surrounding the oil spill containment and cleanup. Yet there are many other investors, including those outside of the UK, who would like
to participate in these trading opportunities yet do not want to go through the trouble of opening and funding an international stock trading account.
Now, there is an alternative: Binary options on the BP share price (available during the regular trading hours of the European day).
At right is an example of an above/below one-hour binary call option on the BP share price taken from
StartOptions.
These stock options are available during the regular European trading hours.** The option has a 70/10 payout*. In the example shown, this option
started trading at 6:00 a.m. and can be bought at any time up to ten minutes prior
to the option's expiration at 7:00 a.m., after which time
a new option will be available for trading. The blue line shows the price history of
the BP share price over the life of the option thus far.
The current BP share price is 369.30 p. If the investor anticipates that, at option expiration, the BP share price
will be above the current price (the green shaded area on the chart), then
the investor will click on the green CALL button to invest in the binary call option that locks in the current price. After so doing, the
customer need only wait for the option to expire. If the binary call option expiration price is
above the customer's
locked-in price, then the binary call option will return the maximum payout, in this case, the initial investment plus 70%. If not, then
the customer will receive 10% of the initial investment meaning that 90% of the initial investment is lost.
PUTS on BP SHARES
At right is an above/below one-hour binary put option on the BP share price also taken from
StartOptions.
The characteristics of this option are similar to the binary call option in the example above but this time, the maximum payout
will be earned if the BP share price falls.
The current BP share price is 369.04 p. If the investor anticipates that, at option expiration, the BP share price
will be below the current price, then
the investor will click on the orange PUT button to invest in the binary put option that locks in the current price. After so doing, the
customer need only wait for the option to expire. If the binary put option expiration price is
below the customer's
locked-in price, then the binary put option will return the maximum payout, in this case, the initial investment plus 70%. If not, then
the customer will receive 10% of the initial investment meaning that 90% of the initial investment is lost.
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* Payout may be higher or lower depending upon the instrument being traded. As well, the maximum payout usually decreases
as a binary option approaches the end of trading.
** U.S. company stocks are available during the regular trading hours of the North American day.
© 2010. World Link Futures, Inc. All rights reserved.
Binary options trading or digital options trading involves risk of loss and is not appropriate for everyone. Only risk capital should be used. Over-the-counter
binary options trading or digital options trading may be prohibited in some jurisdictions. Customers should inquire with their local financial regulators for more information.
The binary options trading strategies shown above are for informational purposes only. No representation
is being made of the gain or loss that can be achieved from following the trading strategies.
Investing in binary options, like all investing, entails risk of loss. You should therefore
only invest with risk capital meaning money that you can afford to lose. Binary options
trading is not appropriate for everyone.
Keywords: binary options trading strategies, binary options, digital options, trade binary options, guide, beginner
Abstract: Trade videos describing specific binary options trading strategies along with the basics of binary options.
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