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Using Fundamental Analysis to Trade Binary options

One of the big advantages of trading binary options is that just simple yes/no type decisions are made enabling traders of every level, including complete novices, to stand a good chance of claiming the payouts of up to 90%, after just 15 minutes of making the trade. A good way to enhance the probability of success is applying some fundamental analysis to your binary options trading strategy and in particular using the economic calendar to trade from.

Trading from the charts is all well and good but the importance of fundamental analysis cannot be ignored. A great tool that can prove to be invaluable to any binary options trader is the economic calendar. There are plenty of free economic calendars available to view in the internet and when used correctly can form an integral part of any successful trading strategy.

The economic calendar provides a timetable of decisions, publications and announcements that affect economies all around the globe. Often the markets react to these announcements and publications of data and this is where the keen-eyed Binary trader can cash in. Following the announcements are generally short periods of volatility as the markets evaluate the data. If the market likes what it sees then prices invariably increase, whilst when the market doesn’t like what it sees the prices decrease. Knowing what is important to which country and the effect any data published might have may need a bit of research, but the effort put in will pay off.

A good example of using an economic calendar when trading the Japanese Yen is to look out for publications of supermarket and convenience store results. Japan is very much a consumer driven economy and it has a culture of people doing their shopping in convenience stores. If sales are down, the economy is not being fuelled by spending and the Yen suffers. Japan, like America is a big oil importing nation so a rise in the cost of oil will affect production and make the exports more expensive pushing the Yen down. Similarly, the publication of key indicators like interest rate decisions will have an immediate effect upon a currencies price as do key statements by leading figures in the global financial world like the Fed Chairman Ben Bernanke.

To get the most out of an economic calendar, take the time to see what the previous figures were, the forecast and its importance to the markets. Use the calendar to form an aid to a trading strategy as by itself; it cannot be relied upon to form a successful trading strategy alone. However, when using the economic calendar in conjunction with some technical analysis/chart reading and a good general reading of global financial news, the economic calendar can be an important tool to every Binary Options trader in a trading arena where just a little bit of knowledge and understanding of the markets can give you a definite edge.

Tips for Binary Options Trading

So you’ve finished reading about binary options, learned about the terms used in the industry and have started chosen the market you want to invest in. Now your next step is to learn how you can make profits in binary options trading!

But how exactly do you do that? How do you make high returns on your binary options investment? Here are 4 tips:

Binary Options Trading Basics

If you’re looking for a good way to grow your money without increasing the risk on your portfolio, then binary options is the best solution. With binary options, traders with little or no knowledge of the different financial markets can bet on the stock market, commodities, Currencies and even the main indices.

Binary Options Trading Main Indices

Thanks to the improvement of internet technology, trading in the financial markets has never been easier. Now, individual investors no longer need thousands of dollars to trade, and they can even have a low-risk method of doing it.

By trading binary options, investors can earn as much as 81% of their starting capital. And because earnings do not depend on the magnitude of price action, trading does not require expensive tools and extensive knowledge to become profitable.

The Different Types of Binary Options

Even though through the course of our discussions, we have been talking as if there is only just one type of binary option, in essence there are several different types that one can deal in. This article will focus on what are the different types of binary options that a binary options trader can transact with as well what are their unique features.

- Cash or Nothing Binary Options:
The most commonly discussed binary options is the cash or nothing option. It is also the simplest form of binary options that a trader can deal in. Basically with this type of binary options, you have to decide as to whether the underlying asset price will rise or drop by a specific time known as the expiry date. If you are of the opinion that the underlying asset price will be higher than the present market price at the time of closing, then you will purchase what is known as a ‘Call’ option. And if you think that the price will close lower than the present market price, you will buy a ‘Put’ option instead.

Suppose that your assumption was right and you ended up ‘in the money’, you will receive a fixed payment that ranges from 65% to 75% (this amount varies with the broker that you are dealing with). And if you ended up ‘out of the money’, you will lose all that you invested in the cash or nothing binary option. Again depending on your broker, in some cases, even though you ended up out of the money, some binary options brokers will still reimburse you a portion of the capital that you invested. The amount reimbursed varies from 10% to 15%.

 

-Asset or Nothing Binary Options:
This type of binary option basically is the same as the cash or nothing binary options. The only difference is that the payout of the option is determined by the price of the underlying asset itself rather than a fixed payout. You can view it as the asset being actually paid out upon expiry rather than a contract being taken out on the underlying asset. Then again, the distinction is largely semantic.

-‘Touch’ & ‘No Touch’ Binary Options:
With a ‘Touch’ binary option, you have to see if the price of the underlying asset will reach or touch a specific target price from the time of purchase of the binary option to the time of expiry. With a ‘No Touch’ binary option, the converse is true. Here you have to decide if the asset price WILL NOT touches a specific target price from the time of purchase to the time of expiry of the binary option. In short, the contract will yield a return if the specified target price is not reached.

-Double One Touch & Double No Touch Binary Options:

The double touch & double no touch option is quite similar the single touch & no touch binary option. This only difference is that payout is determined through two specified prices instead of just a single specified price. Thus, if the price (For A Double Touch Option) falls between these two specified prices, payout will be assured. For a double no touch option, payout is only assured when the price does not reach these two specified prices from the time of purchase of the option to its expiry time. These options are sometimes known as ‘Range’ binary options and are available for trading only with certain brokers.

 

 

Binary Options Frequently Asked Questions (FAQ)

1. What is the CBOE?

The Chicago Board Options Exchange (NASDAQ: CBOE) which is located in Chicago, is the biggest US options exchange with a trading volume each year of around one billion contracts. CBOE offers options of over 2,200 companies plus 22 stock indices, and 140 exchange-traded funds (ETFs).

2. What are the main differences between binary options and traditional options?

Binary options are generally priced lower than traditional options. This is because the payout for a binary option is fixed whereas the payout for a traditional option varies according to the value of the underlying asset.

Choosing a Binary Options Trading Platform

Because investors are able to tell beforehand how much they stand to gain from trading in binary options, this fact have helped to boost the popularity of binary options as an attractive investment vehicle. Nevertheless, like all forms of online trading, you need to select a trading platform that meets all your requirements. The following list below show some of the features that you need to look for when selecting a binary options trading platform.

Binary Options Hedging Strategy Explained

The word binary is used for the method of representing numeric values using the digits 0 and 1. The reason why binary options was the name derived for this kind of options trading is that there can only be two possible outcomes in this trading: either in the money or out of the money. The former means that you will gain profit from the investment in the stocks being traded. Being out of the money means that you will not get the payoff.

Finishing in the money means that after the trading time expired (expiry dates come in 1 hour, 24-hour, 1 month options), the market you are betting on must have a have a higher or lower price, depending on whether you chose call or put (with call meaning that you bet the performance of the stocks will go up while put is the other way around).

Binary Options Trading Strategies – Scenarios for a Successful Trading

Binary options are one of the most popular financial trading vehicles today. Besides offering traders the option of trading online, it is also a less risk trading option when compared to its stock trading counterparts. It allows traders to earn maximum profit with calculated risks and options on when and how to manipulate their investments before a stock’s time of expiry.

The term “binary” option was derived from the fact that binaries were composed by the numerals 0 and 1. Similarly, in binary options the traders can only anticipate for two things: receive the predetermined payoff or get nothing from your investment.

Binary Options Trading

Binary options trading are presently a highly popular form in the financial world. What has gradually been attracting investors is the simplicity of the system which is extremely easy to grasp. When you trade in binary options, you put some money on any basic security listed on the market. The deal is then made at a predetermined amount and time.

Binary options trading involve no actual buying. The security carries a strike price which is actually the cost of the security determined in the deal. Once this is done, the investors have just two outcomes to contend with: a) the market will go up, and b) the market will go down. The movement will determine whether the investor ends up making a profit or a loss. These outcomes are called ‘in the money’ or ‘out the money’

Binary Options Assets

The availability of numerous underlying assets offered when choosing a trading platform for binary options can be a huge attraction towards a particular site. When the variety is high, the ability of an investor for creating a personal trade will also be high. Reacting to it and making profits will also be easy in addition to making the trade an enjoyable experience. This may be seen on most of the trading platforms offered by Optionbit , Anyoption, Binarix Trading, Eztrader and others offering more than 50 underlying assets which an investor can trade on.

Types of Binary Options

Binary options are also known as Fixed Return Options or FROs for the reason that the payout amount is fixed and predetermined. The trader simply has to anticipate the direction of the price of the underlying asset or instrument and decide whether the price would go up or go down without considering other factors.
Binary option is considered to as one of the simplest form of trading. As the payout is fixed the traders are aware of the potential profits or losses.

Binary Options VS. Vanilla Options

The binary and the vanilla options would be something that the traders would be well versed with. The former one is also called digital options. The reason for that is that the binary options would have 2 outcomes only which would be different from the vanilla option being the standard one. A pre fixed amount is the pay off of the binary trading option. It is paid when the prediction of the price movement is right at the expiry time. The vanilla standard trading option on the other hand is known to have an expiry date, the standard features with strike price.

Trading with Anyoption Broker

Anyoption is one of the leading online binary brokers today. It can be viewed in 5 different languages and also offers a real time clock in order to track the expiry time of your assets.

The website is full of detailed information about binary options trading and is a gold mine of information about the basics of trading with binary options or digitals. Aside from the many different underlying assets that traders can choose from, the website also compiles information about the past expiries of various assets. Anyoption makes sure that no trader will experience technical glitches in using their website and so far they were quite successful at doing all of the aforementioned things.

Binary Options

Binary options can be defined as a contract which upon the fulfillment of a specified condition or better to say, price movement, pays to the trader a predetermined fixed amount depending on the condition of his contract ending “in the money” or “out of money” at the time of expiry. If the contract ends “in the money” the trader is paid the fixed predetermined amount but if the contract ends “out of money”, the trader receives nothing.

Basically there are two types of binary options, the “cash or nothing” and the “asset or nothing“. In the cash or nothing type, payout is some fixed amount of cash if the contract ends “in the money”. Whereas in the case of asset or nothing binary options, if the contract ends “in the money”, the payout is the value of the underlying security. Thus as we see, there are only two outcomes and this is what the name ‘binary option’ suggests.“Digital options” is simply another name for binary options,when the  term “digital options” is more commonly used in the trading of Forex and in the interest rate market.

Considered as one of the fastest and most popular form of simplified trading products, binary option offers fixed odds returns, with a structured reward and risk ratio. Binary contracts are available on a variety of assets like stocks, currencies, commodities and indices. Binary options trading are becoming increasingly popular among traders all over the world because they offer a high payout within a short trading duration and also offer some hedging features.

Binary Options Trading Review

In July 2008 Binary Options trading started grabbing the attention of brokers and traders alike when it was listed by Chigaco Board of Options Exchange (CBOE). Before this time binary or digital options had been traded by large banking institutions and investment houses. One such example is IG Markets who claim to have created Financial binary betting in 2002.

Digital Options Trading

“Digital options” is another term for binary options, and refers to a relatively simple method of investing.  In digital options trading there are only two possible outcomes—the investor can expect to be paid a fixed amount if the investment closes in the money or to lose their entire investment if it does not close in the money.

The most important thing to understand about digital options is that the payout remains the same no matter how deep in the money the investment closes.  Let’s say, for instance, that you enter a digital option at $20 that will pay $250 if it closes at $20 or more.   You will get paid a flat rate of $250 if it closes at $21 or if it closes at $2,021.  It doesn’t matter how much your investment goes up, the payout is predetermined and does not change.

Binary Options Strategy

Binary option trading is fast becoming popular among the traders as an exciting and interesting form of trading. There are many binary options strategies that traders employ to become successful at trading. Even though different traders follow different strategies, yet the basic concept of all binary options strategies is the same. Unlike in other trades, binary option trading provides only two possible outcomes, loss or gain.

Binary Options Trading Strategies

Binary options trading has come up as an interesting and exciting feature of the financial trading market in the recent years. In this type of trading there are only two possible outcomes, a win or a loss. The quick returns and high yields are the most important features of binary options trading that have attracted so many investors to it. There are different binary options trading strategies followed by different traders.

Binary Option Hedging Strategy

Hedging strategies can be defined as the strategies that are designed to reduce the risk of investment by using put options, call options, future contracts or short selling methods. The basic purpose of using hedging strategies is to reduce the risk and potential volatility of an investment or a portfolio by reducing the risk of loss. Hedging gives the benefit of locking in the existing profits.

Binary Options Betting Explained

When the British Company dealing in financial derivatives and sports betting, IG Index, introduced binary options betting in 2003, investors in the financial markets gained another investment vehicle from which they can profit with. Today, binary options betting are dealt with by IG Index sister company called ‘Binary Bet.Com’. The company is also popularly known as ‘ExtraBet’ by many.

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