Binary Options For Beginners: How to Get Started
Looking to get started with binary options, but not quite sure how? This binary options for beginners guide lays down everything you need to get moving.
The stock market can seem like a gamble sometimes.
You might even feel like going to a casino is a better bet.
It’s more fun at least.
What about combining them into one? Welcome to binary options for beginners.
Learn about what it is, what it’s not, and how it can work for you.
What are binary options?
You’re familiar with stock market trading. You can buy a stock, bond or even a commodity.
You own the asset, whether it’s a company’s stock or something like gold.
But there’s another way to make money, without owning the asset.
It’s called a binary option and here’s how it works.
The basics of binary options for beginners
A binary option is a bet you place on the stock market.
Gambling at a casino is mostly pure chance: red or black, 21 or bust.
With the stock market, it’s more about making an educated guess. But it’s still a guess.
You’re betting that a particular asset will either be up or down at the end of a set time.
As with any bet, there are ways to win and lose.
There are three main steps you’ll follow.
First, you’ll decide on the asset or market to trade in.
You could choose from things like:
- Commodities like precious metals
- Individual stocks
- Stock indexes like the S&P 500
Next, you’ll decide on an expiration date/time.
It can be the end of the day or the end of the trading week.
Finally, the good part: are you buying or selling?
What you’re actually betting on
After picking the type of trade and the time, the last thing is to buy or sell.
It works like this:
You’ve chosen the S&P 500. Do you think the market will go up or down by your expiration date?
If you think up, you buy. Down, you sell.
That part’s easy to understand, but you’ll need to do your homework to decide which way to go.
How much money is involved?
Unlike a casino, binary options only work in round numbers: £0 or £100 (hence the name).
Here’s an example:
You decide the S&P will go up, so you buy. Your contract strike price is £50.
- If it does go up, you get £100 plus your initial £50. Win!
- If it goes down, you lose the £50 you’ve paid.
If you decide the S&P will go down instead, it looks a little different:
- If it does go down, your profit is the amount you bid (£50).
- If it goes up instead, you lose both £50 and £50 more, because it adds to £100.
The folks at NerdWallet give some detailed advice on how to get started.
Get a little practice first
We get it, you’re new to binary options.
That’s why you’re reading binary options for beginners.
One way to get started is with a demo account: real info, real time, but not real money.
That way, you can practice without the risk.
Get started with your demo account today!