To execute the trades, investors can use an online binary trading platforms such as Anyoption , Binarix Trading , Trader XP and EZtrader which are 100% web based and can be used by beginners and more advanced traders . The process of using an online binary trading platform in carrying out a trade is as follows:
* Select the underlying asset like a currency pair to be traded with like the GBP/JPY or USD/EUR , you can also
choose other assets like stocks , commodities and indices .
* Select the investment amount that you want to invest with your trade .
* Decide the direction of the price movement so you will be able to know whether to buy a Call option or Put option.
* Select the expiration Time you wish for the option you choose to buy a put or call for
* Execute your trade
Upon completing all steps with one of the binary options trading platform, all the investor has to do is to wait for the expiration time. If the option expires in the money, the investor will receive the full payout of between 60% to 80% inclusive of his capital. In the other case, they will most probably lose all their investment capital if the binary option expires out of the money.
Reasons for the Popularity of Binary Options (The Advantages)
* Regardless of whether the option expires out or in the money, the investor is well aware of the extent of his exposure. For options expiring in the money, he will stand to gain between 60% to 80% of his investment capital. Whereas if the options expire out of the money will lose only 85% of his invest capital.
* The movement in prices across strike price threshold need not be proportionate to the magnitude of payout for the option. A single tick is enough for the investor to reap the full return on a binary option.
* An investor is not required to study the market in detail to know the extent of the price movements. All that is required for him to know is the direction in which the prices will move.
* Because the trader is able to decide the underlying asset class to invest in, the expiration time and the type of option (Call or Put options) based on the direction of the prices, trading in binary option is extremely flexible.
* Because of the short expiration timeframe that ranges between hours, daily, weekly and monthly, investors are able to quickly turnaround their capital for more investment opportunities and hence maximizing their capital.