Binary options are financial products that give investors the ability to choose whether or not an asset will rise or fall over a certain time period. Returns are fixed which makes the risk relatively low. Knowing the return you will receive at the end of a time period takes the ambiguity of trading decisions. Basically when you buy an option you will receive a fixed payout or loss of your entire investment. There is no guesswork on your outcome.

Before determining how and where to invest your funds, follow financial journals that will list the best brokers with the highest payouts. For instance, Cedar Finance offers a minimum deposit of $200 with a payout of 81%. You can also invest with Easy XP that allows $200 minimum deposits with the same 81% payout. Neither company, however, offers demo accounts. There are risks and you do need to be educated on binaries and trading options before you invest what money you have.

Binary Types

If you are a beginning investor the most common form is the basic binary or “vanilla” option. You will sign up for an account and receive a web page to take you through the trade. The current price of an asset is shown on the trade screen and you will be required to predict a rise or fall at a particular time. If you believe the price of your asset will be higher, mark “call” option on your screen. If you predict the price to be low, choose the “put” button. Watch the expiry or future time limits. When the trade expires you will receive your winnings or lose your investment. You are not able to exit the trade until time has expired. This can be a bit of an anxious time if you have invested more than you can afford to lose.

Touch binaries payout when an asset prices touches a specific level before the expiration period. There is only one price and you choose “touch” or no touch”. Again, you are predicting whether an asset will reach the noted price before the expiry. Hitting the price gives you a payout, but if you miss the mark you again lose your investment.

Assets

Trading assets vary from broker to broker. Most legitimate brokers offer binary options on forex pairs, major stock indices such as the S&P 500 or Dow Jones Industrials. You can trade on commodities as an underlying asset and these include gold, oil, silver and agricultural merchandise.

You cannot trade on all stocks; however, you need to choose from a list of about 50 popular and registered stocks. Apple or Microsoft are good stocks to use as assets for a trade. If you want to know what assets your broker offers, go to their exchange screen and view their menu of assets. You can also go to the Asset Index to learn more about what assets are available for trade on a particular time of day. Reading about the history of an asset also gives you a good background for predictions.