Forex Binary Options Trading - How to Collect High Returns

Forex binary options trading is taking the digital options market by storm with an easy "up and down" fixed return options system that even the most inexperienced binary options trader can understand.

Let's begin this post with a short explanation about the Forex. The Forex, or Foreign Exchange Market, allows banks and other institutions to easily buy and sell foreign currencies. The main function of the Forex is to facilitate international trade and investment by helping businesses convert one currency to another. For example, it enables a European company to import products from Japan and pay in Yen even though the business's income is in Euros.

Currencies on the Forex are floating currencies, which means that their exchange rates fluctuate according to the Forex market. The value of a currency rises whenever the demand for that currency becomes greater than the available supply and will drop when the demand is less than the available supply. This is where we get to options trading on the Forex. In very recent years, this new kind of digital options trading has become the leading investment choice for the average person who wants to participate in the Forex.

Binary trading, through an online binary option platform, offers traders the opportunity to call and put positions on major currency pairs such as the US Dollar against the Japanese Yen and the US Dollar against the Euro, among many others. With binary options, or fixed return options, you are forecasting whether one currency will trend up or down against another currency.

Online option trading platforms offer individual traders the chance to participate in the Forex using lower capital amounts but with the same high yield returns as any other trading method. Options trading payout can be hourly, daily or monthly. Easy call and put options purchases are made with a simple click. You can open an online account and trade options for just $100.

Advantages of Binary Options Trading

Binary options are an exciting new trading concept in the financial world. There are several reasons for its appeal:

RISK MANAGEMENT: Traders know ahead of time their amount of possible loss or gain. The risk is less in comparison with more traditional trading, offering large potential gains with minimal loss. Markets Pulse gives traders an additional benefit by providing a protection rate of 15%, meaning that a trader cannot lose more than 85% of his investment in trading.

SIMPLICITY: This type of trading provides a great way for inexperienced traders to start trading. Traditionally, market trading has been done by those with deep understanding of finance and market change. Conventional trading involves gaining or losing money on investments based on the amount of increase or decrease in the price of assets. In this new and intuitive type of trading, traders predict the direction of the market. Binary options also have a much shorter shelf-life than futures trading or stocks. Traders make predictions on the direction of the market within a day, and sometimes within an hour.

LESS REGULATION: The regulations for this type of trading are less strict than other conventional forms of trading. Binary options trading are available to anyone with Internet access, and options are traded round-the-clock. If companies find regulation to hamper business dealings, they can easily move offshore or to another location with less regulation.

RANGE OF OPTIONS: It offers a range of different products to trade- from financial instruments to sports and the weather. Currently there are a limited number of trade choices within binary options, but as time progresses and this type of trading becomes more conventional the trade choices are predicted to increase.

Binary Options Trading is Emerging As a Cheap Way to Play With the Big Boys

Binary options trading is an exciting emerging field in the world of investing. As the name implies, there are only two potential outcomes in a binary options trading contract - win or lose. The way most contracts are structured there is a fixed payout for win (typically 75% profit plus return of initial investment), while the lose payout is typically around a 15% return of capital. Maybe a few numbers would help.

A successful $200 trade in a binary options trading contract would pay $350 ($200 initial investment plus 75% profit), while an unsuccessful trade might pay $30 (15% of the original $200 investment). It does seem strange to receive a return of some capital on an incorrect action, but that helps make the market work - and really creates some interesting hedging opportunities. It's almost like getting a 'parting gift' on a game show, no?

There are some limitations on the available opportunities to participate in this market, as there presently aren't a wide variety of securities traded on it. On the other hand, those few securities which are traded on the binary options trading markets are extremely well known, highly liquid securities such as the US Dollar/Yen fx rate, Google, Nasdaq Index, and Microsoft.

One great aspect of this type of investment is the quick turnover rate of investments. Options expire hourly, meaning your investment payoff occurs within the same day - rather than the weeks, months, and years it may take to see a return in other forms of investments.

Another really great aspect of this emerging market is the low barriers to entry. It only takes $100 to open account - a stark comparison to the ten thousand dollars needed to open a traditional options account with your regular brokerage.

Binary Options Trading Restricted by Dodd-Frank Legislation

The Dodd-Frank bill has had some impact on binary options trading for US residents. One of the principal bottlenecks of the legislation has been the narrowing of eligible brokers for particular futures and commodities transactions. While the hurdles to make option contracts available to traders are not insurmountable some brokerages won't be able to offer their full suite of products to investors until regulations are finalized.

Commodities Binary Options Trading Not Broadly Available to US Residents
The runup of commodities prices has in many cases been stoked by the popularity of short-term trades. This largely unregulated industry has in some cases been muzzled by Dodd-Frank legislation restrictions on how trades can be fulfilled. Regulations still need to be passed in order to clarify / define what types of transactions made be made by what types of market participants. While a few existing market arrangements have enabled some existing firms to continue to offer commodity contracts, others have had to halt their offerings to US residents, in some cases hurting US investors.

Currency Option Contracts in Some Cases Restricted
Similar restrictions in trade order flow have fallen on currency option contracts as well, much for the same reasons. Dealers who were not using a particular method of transaction routing have been closed off from the very popular currency binary options trading market. Mercifully some traders have been able to adjust their accounts to either move to different brokers or change the assets traded to use more vanilla stock and index binary options trading instead. Impacted brokerages have indicated no drop in overall trade volume on their platforms however it stands to reason the longer assets remain unavailable the more clients will ultimately defect for less-restricted firms.

Regulatory Review and Regulations Needed for Clarity
Those dealers left out in the cold and unable to offer a full product offering are awaiting further clarity from US regulating agencies as they attempt to enact rules in the spirit of the Dodd-Frank legislation. Once more specific rules are in place the playing field will hopefully level out for brokerages currently excluded from US markets in commodities and currency option contracts. As it stands right now very few companies are offering binary options trading on these specialty assets - which ultimately hurts (by reduced competition) the very investors that Dodd-Frank legislation was designed to protect. It remains to be seen how long it will take for regulators to complete their review and pass rulings. While all US investors wait traders overseas will continue to have better access to these popular international markets and assets.

Develop a Binary Options Trading Strategy Today!

When investing, it is important to take the time to understand the various tactics one can implement to maximize their returns. Before an individual starts trading, it is worthwhile to understand the various binary options trading strategies that are available.

Most digital options platforms provide information on historical charts data, and articles on how to be successful in your binary options trades. Taking this information and identifying a series of binary options trading strategies that will enable you to grow your financial gains, is an important element when trading.

Trading strategies involve developing a set of rules that assist an investor in making their trading decisions. Although digital options provide a simple platform for trading, developing binary options trading strategies is still an important exercise. Taking the time to understand the different methods available for achieving your financial objectives, helps identify unique ways of optimizing your strategy.

As is the case in traditional trading, digital options offer a wide variety of strategies for investors. The standard strategies are to select a call or put option depending on if the investor believes the security will increase or fall when it reaches the time of expiration. A more sophisticated approach is for investors to focus on one asset that they can track over time.

At a first glance, focusing on one asset may seem to be a basic strategy but sometimes simplicity can lead to efficiency. By implementing this strategy, an investor can build an understanding of this specific asset, assisting investors in a number of ways. First, it enables a focused approach to researching by reviewing historical charts data on the digital options platform and conducting internet searches on the security's performance and financial news. It also helps investors develop a view on how the security is trending, highlighting any patterns in movement over a particular period. In essence, this focus will provide the investor with a growing level of expertise in that asset that will help them experience positive financial returns.

There are a number of binary options trading strategies out there and it is up to the investor to learn about the various strategies that may work to meet their unique needs. Part of the beauty of investing through a digital options platform is in the quick turnaround of results. With expiration times ranging from an hour to a day, it enables investors to test different strategies, positions and quickly develop an understanding on how to maximize their returns.

Taking the time to identify and develop a clear binary options strategy has the ability to pay significant dividends in the long-term.