How Does Binary Options Work

Here you will find a step by step guide to binary options trading. We will explain in detail how binary options work.

What Is A Binary Option

A binary option is a financial instrument making it possible to speculate in the movement of an underlying asset without actually owning that asset.

Trading Binary Options

When trading binary options you place a bet on wether the price of an underlying asset will go up or down. If you are right you will win a predetermined sum of money. If you are wrong you loose your stake.

When trading binary options can never loose more than your stake. And you always know the exact amount of your possible payout should when placing your bet.

Trading binary options is done through a binary options broker. You create an account online with the broker and then use their platform to place your bets.

Step by Step Guide to Binary Options Trading

Here you'll find a step by step guide to trading binary options.

1. Decide On An Underlying Asset
2. Set Your Timeframe
3. Deside the Size of Your Bet
4. Call or Put

1. Decide On An Underlying Asset

Which asset are you going to trade? You can trade most currency pairs. Also a large number of stocks are available as well as indices. And of course commodities like gold and oil.

Ask yourself, where does your expertise lie? Stay on top of the fundamentals and keep track of price movements with technical analysis, this is a solid way forward.

2. Set Your Timeframe

Once the timeframe is up the price will be measured and you will have either won or lost. There is no other outcome with binary options trading.

There are a number of timeframes to choose from. The most common being:
5 minutes
60 Seconds
2 minutes
10 minutes
20 minutes
1 hour
1 day
1 week
1 month

3. Decide The Size of Your Bet

How much do you want to bet? Here you simply set the size of your stake. Depending on the broker you choose, you will have a min bet from as low as $1 and up to $25. The max bet also depends on the broker. There are max bets as high as 75 000 USD. But most brokers cap the bet at a couple of thousand dollars.

Bet an amount that you feel comfortable loosing. This way you will keep your head clear and make smart decisions, making you a winning trader in the long run.

4. Call or Put

Here you decide if you think the price will go up or down. Up means you will be choosing a Call option. Down means you’ll be going with a Put option. The trading software will make your decision clear by marking the charts with green and red colors. So, this step is quite easy in theory.

One Last Word of Wisdom

Before you head out into the trading world to make your bets and earn your fortune. Well, just for a moment take a deep breath and hear us out. The theory behind binary options trading is, as you can see, very easy. But this does not mean that it’s easy to make money on binary options.

In order to make money on binary options you have to know your underlying asset like the back of your palm and be aware of all fundamentals affecting the asset, not just the most obvious ones. So, start small and work your way up. This is the best advice we can give you.

Best of Luck!