You can wait for Google's quarterly earnings reports and periodic news announcements, constantly keeping up with the company's chart to see where they are heading. Such an outlook can provide more data and help in trying to analyze the company's performance for several months, before the option is no longer available for trading. Another important fact is the ability to curb the emotional factor. It is well known that emotions may affect and even harm traders' decisions, and opting for longer term options leave a smaller room for the "exciting" nature of the intraday binary options trading.

On the other hand, this means that the traders of longer terms options are unable to react to market developments and take advantage of them, as their funds are locked until the expiry. There are some brokers who offer long-term touch options that can prove useful in situations like this, but they carry an additional amount of risk as well. The simplicity of binary options enables an intuitive trade and this is why no complex arithmetic is required in order to determine the fair value of an option.

Moreover, numerous brokers can be found on the internet, who offer trading with binary options which are not only guaranteed to supply the speculators with all big financial instruments, but they also guarantee the big competitions that the customers are provided with good and fair prices from the brokers.

Besides, one requires no high entry capitals to trade with binary options so that particular positions can be established, since most brokers already enable an opening of an account with a beginning balance of a few hundred Euro.

On a final note, binary options are not traded on margin, which is why in the worst case of the complete initial input being lost —by way of comparison, with trade of currencies or futures it is common to establish its positions partly with borrowed money from the broker, which in the case of an unfavourable performance of a share, it can bring about that one loses more money than that deposited onto the broker account. The big disadvantages of binary options are that the trade is as easy as anything for you, that you are easily available and that the functionality of each layman can be understood — which is why especially beginners are dazzled with the high profit possibilities which can amount to percent.

Even if, in the case of binary options, it is about elaborated financial products which have their eligibility, it is not allowed to withhold the fact that it is about highly speculative investment products which, in most cases, last for a relatively short period. To be able to achieve profits on a continuing basis it is inalienable, that the trader has valid prognosis models available and he must be able to remotely access profound knowledge within the range of money and risk management.

Yet now the easy access to the binary options leads to the fact that the most speculators trade straight on without a plan resulting in the loss of their complete capital within a few days or weeks.

It is thus applied to highly speculative instruments like binary options, that those interested must know what they are doing so that they can use the advantages of these financial vehicles.

Cliff Wachtel, CPA, MBA, former Chief Global Markets Analyst, Director of Market Research, New Media and Training for a number of leading online Forex and CFD brokerages. His focus includes global market drivers, forex, currency hedged and diversified income investing, and related topics like MLPs, REITS, BDCs, etc. Since the Great Financial Crisis began in , Cliff was among the first financial writers to focus on stocks that provide steady, high yields currency diversification for insurance against currencies being steadily devalued.

Articles focus on both top income stocks for exposure to multiple quality currencies, and safer, simpler less demanding types of longer term forex trades than commonly covered on other forex sites. He also posts a variety of articles on topics ranging from weekly strategic global market analysis, conservative forex trading, assorted special reports, currency diversified income investing, binary options, and trader training articles via multiple websites.

His home sites include: globalmarkets. com, thesensibleguidetoforex. com, caesartrade. com, globalmarkets. com, and others. Most can also be found at leading financial websites like seekingalpha. com, businessinsider.

com, and forex sites like forexfactory. com and fxstreet. His work is regularly translated into numerous languages, including Spanish, French, Italian, Turkish and Russian, Arabic, German, and Chinese, often with his express knowledge and permission! Marc Faber, John Mauldin, Robert Prechter, and Tom Lydon. Prior to his current positions, he was Chief Analyst at avafx. He attended Vassar College and Cornell University, and is a certified public accountant.

traditional spot market instruments and standard options for forex, stocks, indexes, and commodities. Limited risk! No experience necessary! The material I found was from option brokers themselves or those promoting them, and was more focused on marketing than on providing an objective look at binary options, when and for whom they may be appropriate. Full Disclosure — I provide analysis for anyoption.

Like most rational adults, I gave up believing in get rich quick schemes shortly after I abandoned belief in Santa Claus and that Mom was still a virgin. Despite the dubious claims, binary options have many legitimate applications as a complement or substitute to traditional spot market instruments.

The industry is growing fast for the same reason anything becomes popular, it meets a legitimate need. The following is the product of my own research and analysis to answer that need. This partially explains the lack of good objective material on them. Those already familiar with them can skip to the next section.

An option is a right but not an obligation to buy or sell an asset at a fixed price for a fixed period. There are 2 kinds of options. If the OTM call option is held until the time of expiration, it is worth nothing. Traders buy call options to profit from a rise in price. A put option right but not an obligation to sell an asset at a fixed price called the strike price during a fixed period that ends on the expiration date.

If the OTM put option is held until the time of expiration, it is worth nothing. Traders buy put options to profit from a drop in price.

Exit Standard Options At Any Time: Unlike other spot market instruments, options have a fixed maximum life the ends on the expiration date. However with a standard option you can close your position at any time prior to the expiration of the option to take profits or cut losses.

At least one broker anyoption. com, traders allow this with certain assets under certain circumstances. There may well be others that also offer the option of an early exit. With standard options: gains or losses can vary with how much the price of the underlying asset has moved by the time you close your position. Thus monitoring and planning your exit to maximize profits or cut losses is just as important as planning your entry point.

With binary options: gains and losses are fixed, regardless of how much the option is ITM or OTM. Only a small group of elite traders manage to master that complexity and succeed. Specifically, in addition to correctly forecasting price movements over a given period no small feat by itself spot market trading demands considerable skill and discipline need for:.

The entire trading process involves about 10 steps, more if you include keeping a proper journal of your trades and studying it to learn from your mistakes which we discuss and illustrate in Chapters , each of which requires education and practice to execute successfully. That simplicity makes it easier to succeed. That simplicity is critical for both new traders or those who struggle to be profitable with standard spot market trading.

Both of these require solid skills in technical and fundamental analysis. Getting these is a matter of some study and practice. This process can be a matter of weeks or months rather than years, at least if one learns to identify and stick to relatively simple trading situations that only require basic analytical skills.

Thus traders who are either new or still struggling to be profitable should strongly consider trading via binary options as a more rewarding way to ease into trading.

While selections for individual stocks are limited, most major indexes, forex pairs, and commodities are available around the clock at the better binary options brokers. While these stars should be hesitant to deviate from what works for them, they should consider that :. That ability to trade faster can be critical when prices are moving fast and opportunities vanish quickly.

Thus even when traders are too fatigued or preoccupied to hedge a position via their usual instruments, they can quickly hedge and cut risk with binary options. True, at least for winning trades, the ones when you correctly forecast the trend over the life of the option and it closes higher than the strike price, i.

in the money ITM. While the exact figures vary between brokers and asset classes, with losing trades cost you more than you earn from winning trades. As we discuss in depth in chapter 3, the greater simplicity of binary options trading makes high win rates quite achievable if one trades intelligently according to the guidelines we discuss in chapters The bigger issue is, should most traders even be trying to trade such short term time frames? The short answer: only in specific cases.

As with any kind of day trading, most fall into the latter category, and would be more likely to survive with both their capital and confidence intact by trading on longer time frames in which there is more meaningful evidence available and more time to do thorough analysis of the trend.

In other words, less skilled traders will lack the information and time needed to make successful decisions. This is a key component to valuing standard options, which decline rapidly in value as they approach expiration. Given the above, it should be clear that in general, beginners or less successful traders should first gain experience with the longer time frames before attempting to trade daily or hourly binary options. While the profits come more slowly, they are more likely to come.

In sum, unless you know precisely when to apply them, hourly or daily binary option trading risks becoming low yield gambling rather than high probability trading driven by carefully calculated risk taking. For the brokers, such fast turnover is obviously great. So, all offer binary options that expire on the hour, and most offer options that expire at the end of each trading day.

Most offer nothing longer than that. Last I checked, only anyoption. com and eztrader. com offer weekly binary options expire at the end of Friday trading and only anyoption. com and globaloption. com offer monthly expirations close at the end of the final trading day of the month. Again, few traders are likely to succeed with such short expirations except for the situations noted above.

As detailed in Chapter 3 below, a successful spot market trade involves about 10 separate decisions, each of which requires plenty of study and practice to do successfully. In contrast, binary option trading is comprised of only 3 relatively simple steps. The fixed time frame and payout eliminates most of the complex and often emotionally draining exit planning, and risk and money management decisions. With binary options you only need to:. However they are easy to do, and lower your risk and thus boost your income, so follow them and maximize your returns.

One of the keys to trading success is to survive the learning period. The shorter learning curve and far simpler planning of exits, risk and money management issues make that survival much more likely. Risk IS more defined and thus controlled than with spot market instruments, and is often lower than with standard options. True, binary options brokers earn their money on the difference between what they pay out for winning and losing trades.

See Chapter 5, the section on No Spreads Or Commissions. STAY TUNED FOR COMING PARTS: VISIT globalmarketsguide. com for coming parts to this unique series. Cliff Wachtel's Blog Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Options Basics Reviewed An option is a right but not an obligation to buy or sell an asset at a fixed price for a fixed period. PUT OPTIONS A put option right but not an obligation to sell an asset at a fixed price called the strike price during a fixed period that ends on the expiration date.

Binary Options Vs. VARIABLE VS. FIXED TIME FRAME Exit Standard Options At Any Time: Unlike other spot market instruments, options have a fixed maximum life the ends on the expiration date. FIXED RETURNS As their name implies: With standard options: gains or losses can vary with how much the price of the underlying asset has moved by the time you close your position. Specifically, in addition to correctly forecasting price movements over a given period no small feat by itself spot market trading demands considerable skill and discipline need for: Planning when to get in and when to get out: understanding how to set entry and exit points in order to keep losses from losing trades far lower than gains from winning trades Risk and money management: In addition to understanding how to identify low risk entry and exit points, understanding how much cash to risk on any given trade, how to identify and stop losing streaks, keep emotions out of trading, etc.

If you continue to use this site we will assume that you are happy with it. He attended Vassar College and Cornell University, and is a certified public accountant. The shorter learning curve and far simpler planning of exits, risk and money management issues make that survival much more likely. It especially strengthens the understanding of fundamentals because the key to success is detecting the right direction. Quick payoff: Compared to most other forms of trading, the return on your capital investment when trading binary options is very quick. com, and others. However, despite the lower price, the level of risk in comparison to forex positions is lower.

Categories:

• Forex
• Forex Brokers
• Binary Options
• Forex Bitcoin
• Binary Options online