There are different types of trading in binary options. The call and put options are probably the best-known form of trading. Traders can bet on rising or falling prices of a certain underlying. A binary option is always based on an underlying. The option term is determined, as is the stake at the beginning. If the trader is correct with his forecast, then he can achieve an attractive return. If, on the other hand, the binary option does not end as forecast, the trader loses the entire stake. So that traders can hedge a position, some brokers offer loss protection. What else you should know about the type of trading, we list in the following article.
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Call and put options simply explained
Trading with Binary options are possible through an online broker who runs the financial instrument in the product range. The functionality of call and put options can also be quickly understood by beginners. As already mentioned in the introduction, you can bet on rising or falling prices of a certain underlying. If the forecast event occurs, the trader achieves a return. If the forecast event does not occur, the option expires without value means that the trader loses all stakes.
Binary options have a fixed term. The selection of maturities can depend on the respective broker and also on the chosen underlying. Most brokers offer an extensive selection that includes not only short terms, but also medium to long-term terms. Not every broker offers trading with so-called turbo options. The various offers of brokers can differ not only in the terms available, but also in the number of tradable underlyings. When trading call and put options, underlyings from the following asset classes are available
- currency pairs
Call and put options simply explained, but traders shouldn't start trading without a sensible strategy. Despite the simple functioning of this type of trading, it should not be forgotten that binary options are a financial derivative. The price of an underlying cannot be predicted with certainty, so there is also a risk of loss that cannot be ignored. To reduce the risk, choosing the right trading strategy is particularly relevant. For example, if you are betting that a price trend will continue, you can include the trend following strategy for binary options when developing your personal strategy.
Also Trading with call and put options is easy for beginners. However, trading should not be started without the right strategy. For example, the trend-following strategy can form the basis of the trading strategy. Traders should think about their own investment goals before getting started. If you spread the available capital over several positions, you can spread the risk.
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Return and costs
Call and put options can prove to be profitable if traders correctly predict the price development. The regular returns can be between 60% and 85%, depending on the conditions of the respective broker. In the event of a profit, the trader receives the investment amount plus the return. In the event of loss, the trader completely loses the investment amount. From this it can be deduced that the trader already knows about the possible profit or loss when opening the position. For very experienced traders who are more willing to take risks, high-yield trading can also prove to be an alternative. Here, returns of up to 500% can be achieved. However, the risk is correspondingly high.
With the help of loss protection, traders can secure a position in trading with classic call and put options. Traders should first find out whether the broker offers loss protection at all. In addition, the protection can be between 5% and 15%. Which can secure at least part of the deployment. As far as the costs of trading binary options are concerned, various brokers charge fees for the following services:
Withdrawals: Withdrawals from the trading account can be associated with costs. With some brokers, one withdrawal per month is free. Still others charge a fee for each payout. In addition, not only the payout fee has to be considered, but also the minimum payout amount.
Payment method: Which payment methods traders can use for deposits and withdrawals depends, of course, on the respective broker. In addition to credit card and bank transfer, there are often various eWallets among the accepted payment methods. It should be noted that some brokers charge an additional fee for the use of certain payment methods. Any fees on the part of the broker should be clarified before choosing the payment method.
Inactivity: If you want to pause trading for a long time, you may have to face inactivity fees. Depending on the case, it may prove cheaper to terminate the account.
The return on regular trading in call and put options is very tempting. However, traders should not be tempted by the opportunities for returns to rash bets. Which services of a broker are associated with fees can be found in the general terms and conditions or the list of prices and services. For reputable brokers, all fees are listed transparently.
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Term when trading binary options
When trading With binary options, the runtime is an important aspect. The duration of a binary option is fixed so that traders know exactly when it ends. The forecast event must have occurred at the end of the option term so that a profit can be made. Binary options tend to use short terms. But there are also brokers who offer terms of days, several weeks and up to one year. In addition, there are the so-called turbo options, which have an extremely short expiry time.
The runtime of turbo options can be 30- or 60-seconds. If you want to make money quickly with binary options, you can opt for an extremely short term. However, it should be noted at this point that such turbo options are hardly suitable for beginners. Professionals, on the other hand, who have a good market overview and are also able to interpret trading signals, can find an attractive trading opportunity with the 30 and 60 second options. Maturities of several hours may be more suitable for beginners, since the price development can be better assessed here.
Traders who are considering 30- or 60-second trading should consider one have a good overview of the market. Anyone who wants to make quick profits here must have the appropriate experience, because quick losses can also occur if the course direction was incorrectly predicted. For beginners, maturities of a few hours can be more useful.
Binary Options Brokers - Headquarters and Regulation
Anyone looking around the market for Binary Options Brokers, will quickly notice that various brokers also offer binary options trading for German traders. However, the brokers' headquarters are not in Germany, but at most one branch. When investing online, the trust that a trader places in the broker is certainly also important. Therefore, it is advisable to find out whether the broker is regulated. In Germany, the Federal Financial Supervisory Authority (BaFin) is responsible for the regulation.
As many binary options brokers Cyprus have chosen for the company headquarters, care should be taken that brokers based there are regulated by the Cyprus Securities and Exchange Commission (Cysec). In the UK, the FCA is responsible for regulating brokers. If you want to find out whether the selected broker is actually regulated, you can often find information on the broker's website, such as the license number. The regulation of a broker can serve as an indication of a serious offer.
When choosing a broker, regulation should also be included as a criterion in the decision-making process. Some binary options brokers are based in Cyprus, so the local financial supervisory authority (Cysec) is responsible for the regulation.
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Select broker and open a trader account
Which binary options brokers perform best can be determined by means of a comparison. The demands on the trade can differ from trader to trader. Not every trader wants to trade with high stakes, so the minimum trading amount is a relevant aspect. For some brokers, the minimum trading amount is € 5. This means that you can also trade with low stakes. The investment amount can also be spread over several positions. A minimum deposit may be required when opening a trading account. There are minimum deposits between € 10 and € 250.
Traders can access the online registration form via the broker's website. In addition to some personal information, the base currency in which the trading account is to be managed must also be selected. The currencies EUR, USD and GBP are often included in the selection. In order to be able to start trading, the trading account must be populated with credit or the minimum deposit. In addition to credit cards such as VISA and MasterCard, the accepted payment methods often include eWallets such as Neteller and Skrill. If there are any questions about the offer, German-speaking customer support is an advantage. Attention should be paid to this.
Opening a trading account is usually straightforward. When choosing a broker, the amount of the minimum deposit and the minimum trading amount are also decisive for different types of traders. Especially for beginners who want to start trading behavior first, a low minimum trading amount is required.
Demo account useful for beginners and experienced traders
Even when calling and put options can be easily explained, the correct use of the trading platform is also important. A free demo account is a useful tool that beginners can benefit from. So that traders can try out binary options trading with the demo account without risk, the broker will populate it with virtual credit. If you trade via the demo account, you are not trading with real money. As a result, no real profits can be made. The demo account can be used to familiarize yourself with the processes. Positions can also be practiced.
Not all demo accounts can be used without registration. Some brokers offer a free demo account, but traders must first register. If you are not sure whether the selected demo account is free, you should contact customer support. Some demo accounts can only be used for a limited time and sometimes only for a few days. On the other hand, there is no time limit for the use. The amount of the virtual credit can also vary with the different demo accounts. It should be noted that the demo account provides all functions of the trading platforms.
Beginners do not have to have gained experience in binary options trading enter. It can be traded in advance via a demo account that provides the functional scope of the actual trading platform. Trading via the demo account is carried out with virtual amounts, so that there is no risk for traders.
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Generate further returns with bonuses
Some brokers offer a welcome bonus that is aimed at traders who open a trading account as a new customer and make a deposit of a certain amount. Before claiming the bonus, traders should read the associated bonus terms. In order for a bonus to be paid out, certain requirements must generally be met. Frequently, the multiple of the bonus must be converted during trading, so that in particular multi-traders can benefit from bonus promotions.
The bonus conditions usually have to be fulfilled within a specified time, otherwise the bonus expires. A bonus of up to 100% may sound tempting. However, not all traders can meet the conditions, which can lead to disappointments. It turns out that various brokers even demand 40 times the turnover in terms of the bonus amount. If you do not want to approach binary options trading so actively, you should think about not taking advantage of the bonus as the conditions cannot be met anyway.
Through promising bonus promotions brokers can Draw attention to new customers. An additional return can be generated by a bonus, but only if this can be paid out. If the bonus conditions cannot be met, the bonus expires. Active traders can definitely benefit from bonus promotions.
It should be noted that the functionality of call and put options can be easily explained. However, this should not tempt traders to enter effective strategy. It cannot be predicted with certainty how a price will develop, so trading in binary options always involves a risk of loss. The return opportunities are already attractive in regular trading. With high-yield trading, returns of up to 500% can be achieved. Traders must be aware that a high return is associated with a high risk.
To develop a sensible trading strategy, for example, the price development can be included. Part of the investment amount can be protected by a loss protection. First steps can be taken with a free demo account in order to be able to start trading in real money.
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