Understanding digital options trading is a necessity if you want to trade binary options successfully. In this article we would outline want you need to know about digital options trading to kick start your success. To create ease of understanding we would define the terms used in binary options trading.
Jargons of Digital Options Trading:
- Asset: An asset could be currencies(e.g EUR/USD, GBP/USD, AUD/JPY),commodities(e.g Gold, Oil, Silver, Sugar,Platinum),stocks(e.g Apple, Facebook,British American Tobacco) or indices(e.g Nasdaq,S &P500)
- Call: When a trader predicts that an asset would increase in value at a specified expiration time
- Put: When a trader predicts that an asset would decrease in value at a specified expiration time
- Strike price: This is the price of the underlying asset before you commenced trade.
- In the Money: When you ‘win’ the trade you are said to be ‘in the money’.For example if you placed a ‘call’ for a specified time and at the expiration of that time the value(price) increased then you are said to be “in the money’.On the other note, if you had placed a ‘put’ and the value decreased at the expiration of the specified time, you are still ‘in the money’.
- Out of the Money: When you’ lose’ a trade, you are said to be ‘out of the money’. For example, if you placed a ‘call’ for a specified time and at the expiration of that time the value decreased, then you are said to be “out of the money”. On the other note, if you had placed a ‘put’ and the value increased at the expiration of the specified time, then you are ‘out of the money’.
- At the Money: When the value at the expiration time equals the initial value before placing a trade. This means the trader neither loses or gains.
- Pay-out: The percentage of money you stand to gain on the amount you traded with
How to trade
Digital options simply depends on your ability to speculate whether an asset would go up or down at a specified time, you do not have to purchase the asset before you trade, all you simply do is just to make guided speculations that would make you profit in the end Before you start trading digital options with ease, you have to first choose a broker. Digital options broker are the people that have the platform which you trade on
. Now be very careful as their is a massive list of brokers available with new ones springing up each day, there are lots of brokers out there that come up with lots of bonuses and make bogus claims just to lure you into their bait and rip you off your hard earned money. Before you register with any broker do a background check to know if they are legitimate, one important tool also is to check if they are regulated by a strong body. Do not fall for their gimmicks, there are lots of scams in the industry so be very careful. If uncertain you could check our list of trusted brokers, based on our research or contact us. To further ease your understanding of binary options trading we would introduce you to the types of digital options trading:
- High/Low or Above/Below Digital Options: This the most popular type of trade, here the trader predicts whether an asset will go higher or lower than the strike price within a specified expiration time, being right means you earn a profit which is a percentage of our investment(pay-out) and being wrong incurs a loss. For example, if Silver is valued at $856 before our trade(strike-price), and the pay-out is 80%, we now placed a 15minutes ‘call’ with an investment of $200 . At the end of 15 minutes, Silver is now valued at $870, then we make a profit of $160(i.e 80% of $100), so our total money now becomes $360(i.e $160+$200). What if Silver was now valued at $850? This means our prediction was wrong, therefore we would incur a loss of $200.
- Touch: This comes with predefined barriers. The strike price could be lower or higher than the predefined barrier.What these means is that the trader predicts whether an asset will reach the predetermined barrier(Touch) by the time of expiration. If it reaches then the trader is “in the money”, if it doesn’t, then you are “out of the money”.
- Range or Boundary Digital Options: In this type of trade, there is a predefined range with a high and low boundary. The trader speculates whether the underlying asset would remain in the range() or out of the range()
Binary options auto-trade sofwares or robots are softwares created with some algorithms to help you trade automatically, they generate signals and trade based on the inbuilt strategies in them which you can choose from. Nothing beats trading by yourself, thats what we recommend,by trading by yourself without robots you can get a full grasp of the market and develop a good winning strategy that works for you. However, if you want to trade when you are not disposed then you can resort to the use of a robot.You can check on the ones we recommend with high win-rates.