sâmbătă, 7 aprilie 2012

Binary options Tips

Tips

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  • Know the underlying asset - Binary Options derive their financial value from underlying assets.Before investing in a Binary Options, make sure you understand the underlying asset, are familiar with the relevant financial markets and where the asset is traded. Example: Silver Futures are listed on NYMEX/COMEX.
  • Know how to interpret a Binary Option price - The price at which a Binary Option is trading is an indicator of the chances of the contract ending in-the-money or out-of-the-money.
  • Know when to get out of a position - An intuitive trader acts promptly when he feels that his binary contract is going to end out-of-the-money at expiration. Example: You have a $75.00 Silver contract that you feel is not going to expire in-of-the-money. Instead of holding it until expiry, selling it at $30.00 and neutralizing your open interest will help you manage the loss (i.e. $45.00 instead of $75.00).
  • Understand the relationship between risk and reward - Risk and reward go hand-in-hand in binary option trading. The more the risk or unlikelihood of a particular outcome occurring, the greater the reward associated with it. An intelligent investor understands and weighs each contract on these two matrices before taking a position in a contract.

    As an example, an investor who follows foreign currency movements senses that the USD is gaining ground against the YEN and wants to hedge his risk and try to protect his Japanese investment from dropping in value. He may do this by buying 10,000 binary contracts on HedgeStreet, which are “USD/YEN rate will be above 119.50” by 4:00 PM ET tomorrow. If his analysis is correct and the USD gains ground over the Yen, rising above 119.50, the 10,000 binary contracts will expire in-the-money, yielding a total payout of $1,000,000. If he paid $75 per contract, he will make $25 per contract, which is a $250,000 total profit - a 33% rate of return on his investment. However, if the Yen did not end above 119.50, the 10,000 binary contracts will expire out-of-the-money. In this case, the trader would lose his initial investment on the binaries, but would be compensated by the gain in value in his Japanese investments.
Trade Binary Options with No Deposit Bonus (For Beginners) or Best Deposit Bonuses (For Advanced) - Click Here

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