Many options traders approach it as a gambling venture. That's OK if that is your goal. You will have a 50/50 chance of winning 80%. As far as I'm concerned, those odds stink. You will lose all of your money.
A little education goes a long way, notably with binary options, since the results are quick to come. You can get rich or poor very quickly. If you must guess, at least take an educated guess.
Before you trade, at least take the time to understand the game. The markets in general are subject to time tested laws, similar to the law of gravity. What goes up must come down. OK, it's a little more complicated than that, but simple rules indicate much of binary market movement.
Please take the time to learn and understand the simple concepts on this page. Binary option trading is the most simple form of trading market price action. If you learn about support, resistance and trends you will be way ahead of the pack. The best binary systems and binary signals are based on price action.
Binary options trading is purely speculative. Although brokers refer to as investing, the primary purpose of these options is to speculate on the price movement of certain assets. Select stocks, commodities, and Forex pairs are the assets traded on the various platforms.
Binary brokers earn money by creating a payout that is less than your original stake. Most brokers pay out 75 to 80% but some may pay up to 90%. The difference could be considered the spread.
Gambling on these options is a losing proposition. A 75% return on your 50/50 chance is not a good return. You can get better odds at the casino.
trading binary options is a different story. Using the proper techniques, you can actually get the odds in your favor. But only if you learn how to trade options. You must improve your charting skills.
Binary options are a plain and simple way to trade based on your opinion of where a market is headed over a certain period of time. They are contracts that pay out a predetermined amount or nothing at all at expiration. The payout amount for your option is determined before you place the trade.
These options are based on an underlying security, commodity, or currency that have various strike prices to choose from as well as various expirations. Both call and put options are available for trading. If, at expiration, the price of the underlying security closes at or above the selected strike price, the buyer of a call option receives the payoff. If the underlying security closes at a price that is below the strike price on the expiration date, the buyer receives nothing.
In the case of put options, the put buyer receives the payoff per contract if the underlying security closes below the strike price at expiration, and nothing if the underlying security closes at or above the strike price at expiration.
The price of an option usually reflects the perceived probability that the underlying security price will reach or exceed (for call options) or fail to reach or exceed (for put options) the selected strike price at expiration. The cost of options will normally be quoted at a price per contract. The trader can buy multiple contracts. Buyers of options pay for the contract at the time of purchase. Binary options are easy to trade but not easy to win.
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