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Binary Guide

Binary options first made an appearance on the Chicago Board Options Exchange (CBOE) in 1973. Up until 2008, they were widely unregulated over-the-counter (OTC) financial instruments available to banks and high net worth investors. In that same year, the Securities and Exchange Commission (SEC) first legalized the listing of binary options as tradable items on international financial markets. This coincided with the subprime mortgage crisis and subsequent global economic downfall. As less risky investment tools became more in demand, binary options began to gain mainstream popularity.

Binary options allow traders of all experience levels to speculate regarding the future price movements of various underlying assets spanning commodities, currencies, indices and stocks. Selecting an Up/Call option implies a strong prediction that an asset’s price will increase; whereas a Down/Put option signifies a prediction that an asset’s price will decrease. A profit or loss are the only two possible outcomes that can result from taking a specific position. If your option is successful at expiration, it is known as ending In The Money. However, if it is unsuccessful, then you will end Out Of The Money.

Whether you’re a novice or professional trader, it’s important to learn as much as possible about your chosen asset prior to investing personal funds. Technical, fundamental and sentimental analysis tools are many of the techniques that are at your disposal for determining which position you’d like to take. In addition, market analyst recommendations and various graphs that span line, bar and candlestick charts are indispensable resources. They provide detailed knowledge on the historic and current movements of leading asset classes.

When choosing a platform, it’s worthwhile to begin with brokers that offer demo accounts if you are still a beginner. Such accounts allow you to experience trading without investing personal capital and thus serve as an actionable exercise on risk management. Other factors to consider with your broker of choice is their regulation status, payout plans, withdrawal and deposit methods, customer service and security technology. When the time comes to invest your personal funds, aim to not trade more than 5% of your available capital. You don’t want to incur serious losses from the start, so it’s wise to begin small until you build up confidence. Trading smarter is everything, so never invest more than you can afford.