Binary Options

Pair Binary Options Trading

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Pair Binary Options Trading

Binary options can be used to trade almost anything that has a fluctuating level. This may include; interest rates, indices, forex rates, stock and commodity prices among others. While binary options trading allows traders to access hundreds of financial assets from all over the world, brokers are doing their best to further increase the number of assets they offer. In that regard, pair binary options trading has been developed.

How it Works

Two financial assets that are already being supported by a broker are quoted against each other. For instance, The price of gold may be quoted against the price of crude oil. In such a case you may see something like GOLD/OIL  20.2106. This is the price of one ounce of gold divided by the price of one barrel of oil. Usually, the same standard units that are used to measure financial assets are used when trading pairs.

Trading Pairs

Consider the pair mentioned above. The current level stands at 20.2106, but the trader expects crude oil prices to increase due to financial instability in the middles east. This means that the level of this pair will decrease in the near future. The trader opens a put binary option trade on the GOLD/OIL pair with a potential payout of 87% over a 24-hour period. If the spot price of gold increases, or the price per barrel of oil increases, the trade will most likely expire in-the-money, and the trader will get the payout. With an investment of $100 in that trade, the trader stands to gain $87, or lose $10, depending on the direction of the market.

Why Pairs are Popular

Usually, traders only have one asset to analyze before opening a trade. If only a few factors can affect the price or level of the underlying asset, making a prediction becomes easier, and that reduces the potential payout that traders can get from making the right prediction. Obviously, popular positions come with lower payouts. With pairs trading, traders must first analyze dozens of factors that may influence the level of each of the assets then look at their correlations before making a trading decision. This means that making a prediction is a daunting task, which makes the odds of getting it right very low. Consequently, the potential payout is highest for such trades.

Winning Strategy

Most traders know that all the underlying assets in binary options trading are correlated. Since nobody can be an expert in all the assets classes, traders may want to consider specializing in a few assets, including; gold, oil, euro, U.S. dollar and crude oil. This will enable them to successfully trade the different combinations of asset pairs that they are familiar with. Pair binary options trading is not for everyone. It is meant for traders who already have a good understanding of the most popular binary options trading assets.

Binary Options Trading Strategies

Using Candlesticks to Trade Binary Options

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Using Candlesticks to Trade Binary Options

Binary options is one of the most popular trading platforms. This is because it is simple to use and offers a lot of easy methods and strategies. By knowing how to utilize different strategies when trading in binary options a trader has a diverse portfolio. Binary options trading is less risky than other forms, this allows for more strategies to be implemented. Using candlesticks to trade binary options is an underused form of trading. By understanding how to use candlesticks to trade binary options you are sure to boost your portfolio as well as diversify your trading strategies.

Candlestick Charts

Candlestick charts allow for a trader to make a very simple and broad determination with just one look. These charts are used in technical price analysis. Although commonly used in charts, candle formations are rarely used when trading. Candle formations can offer strong indications of how and when prices are likely to move in the future. This information is very valuable for binary options trades. These patterns can offer information regarding price direction. This is essential for traders who need to enter a Call or a Put. In order to use candlesticks to trade it is important to understand the most common patterns.

Understanding the Candlestick

Before using candlesticks in binary options it is essential to first understand the anatomy of the candlestick formation. The upper end of the top shadow of the candle represents the high. This indicates that the low is at the end of the shadow. The body in the middle offers the difference between the close and the open of the time period. On a chart different colors are used in order to identifying whether the opening price was higher than the closing price.

Patterns

Candlestick charts are useful in determining reversal trends as well as exit and entry points for newer trades. Candlesticks offers a host of information about the open and close, as well as the high and low for a given time period. By understanding what the candlestick represents a trader has more knowledge regarding how to utilize these candlesticks in trading. Candlestick patterns offer a simple way to spot potential price reversals. This is essential information for traders looking for a trading bias in binary options. When prices indicate a strong downward trend, a bullish reversal candle can offer an opportunity for call options. When prices indicate a strong uptrend then a bearish reversal patterns offers good assumptions that the rally is over and the traders should consider their put options.

By understanding the anatomy of a candlestick patterns as well as how the patterns work, a trader is better able to utilize candlesticks in binary options. Using candlesticks to trade binary options is a great way to boost profit as well as diversify trading methods. Candlesticks are underused in trading binary options, with research and understanding it is a great method for any trader.

Binary Options Trading Strategies

Binary Trading: Trend Lines Strategy

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Binary Trading: Trend Lines Strategy

There are many strategies for binary options, and it is definitely worth your time to look over some of the more common ones before you begin. You must pick a strategy that works for you, one that gives you the best chance for success, and one that you feel comfortable using with your chosen forex pairs, commodities, and whatever else you decide to use. That being said, you will want to take a look at one of the most popular binary options strategies: trend lines trading.

With every forex pair, you can establish an overall trend line by looking at the average movement between different time periods. Once you have plotted out the average values in those time periods, connecting the points gives you a trend line. Please note that this is not going to hit any of the high or low points on the chart, but is going to move through the middle. As such, you should not assume that the values are always going to hit that line, but that they are going to move in that general direction.

To use this as a strategy, you have to extrapolate the line over the coming time. You can then watch the live movements. When the value falls well below your trend line, the past movements show you that it is unlikely to continue in that direction. You can then trade in the direction of the line – in this case, that would be an upward trade – and you know that, if the trend continues, you are going to win the trade. If the value gets well above this line, you can do exactly the opposite and trade in a downward direction.

Before you do this, you should know that you want to have significant data to back up your trend; in most cases, you’re looking for hours of corresponding data, if not days. Some traders make the mistake of looking at just a few minutes of data, they find the trend, and then they put in the trade. The issue here is that, while a short-term trend may be heading down, that could be embedded within a long-term upward trend. These traders then lose because they are not analyzing enough data, so they end up trading entirely in the wrong direction.

On the whole, this is not a tough strategy to use. Yes, there are going to be times when the trend switches and you lose your trade. To find out how often this happens, it is good to do some paper trading first. By doing this, you put yourself in a position to see when a trend will hold and when it will not. If you do not have a strategy that you like at this time, or if others have failed, you should try out one of the most common binary options strategies: trend line trading.

Investing

What are Derivatives? Trading Safely with Derivatives

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What are Derivatives? Trading Safely with Derivatives

What are derivatives? In simple terms, derivatives are contracts that stipulate and legalize trading agreements between parties. The value of a derivative is based on the existence and performance of an underlying property, and although it (derivative) does not have an entity of its own outside the underlying assets, it is a powerful financial tool that can be legally traded. Despite available information, most people still end up being confused about the actual definition, role and working mechanism of a derivative.

Key Components of Derivatives

As aforementioned, derivatives are trading contracts between parties. A valid derivative must have at least two parties in a derivative, as well as a mediator/ witness that validates the agreement; making it binding to concerned parties. In addition to the parties, a derivative must define the derived value, the underlying asset(s) and its/ their value(s), the period of the contract and any other specified terms of the contract.

Derivatives Demystified

Farmers, product manufacturers, banks and consumers of all products and services hope to benefit maximally from their sales/ purchases while minimizing the risk of such transactions. The transactions may be geared towards reducing a definite risk of loss from unforeseen/ uncontrollable factors, such as weather, political instabilities, market instabilities and natural disasters, while securing a relative degree of guaranteed income/ benefit. Some entrepreneurs may also get into contracts with their capital investors in order venture into new grounds. Such derivatives limit losses, arising from lack of expertise or experience in a field, while offering an opportunity for potentially outstanding income.

Advantages of Derivatives

Like most other things in life, financial transactions and other investments do not always have a guaranteed outcome. In a chain of events, one factor or another can trigger an undesirable outcome. Derivatives help people minimize the risk of absolute or excessive losses that may result from predictable or unforeseen factors. The contracts also help people venture into new fields without the huge risk that venturing into such fields may pose.

Risks Associated with Derivatives

Some financial professionals and inadequately-informed investors view derivatives as the most dangerous options people can undertake. This allegation may not be totally unfounded. Derivatives give people a false sense of financial security that may make them throw caution to the wind, and indulge risky transactions. On a mega scale, such as the operations of multinational financial institutions or exchanges, institutions run the risk of running over-valued derivatives; derivatives valued higher than the actual worth of the underlying assets. Again, there is always the risk of one mega institution crippling an entire economy if the underlying assets and the derivatives go horribly wrong.

Conclusion

What are derivatives and what are their popular uses? Derivatives are contracts that have defined values, based on underlying factors, at the expiration of the contract. These contracts are legally binding documents that ensure the parties abide by their (contracts) terms. Derivatives are mostly used by people seeking to venture into new fields, without the extensive risk, or people seeking to minimize their losses.

Binary Options Trading Brokers

Why You Must Trade in Regulated Binary Options Brokers

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Why You Must Trade in Regulated Binary Options Brokers

Binary option trading is seen by many as a get-rich-quick scheme. There is truth to this notion as it is a potentially lucrative means of turning a profit within a short amount of time. On the other hand, it could also lead an investor to financial ruin if he is not careful with his money.

There are far too many brokerage companies popping up all over the Internet as people are scrambling to capitalize on the trend. Yet many of these brokers are unregulated entities. This means that they are not answerable to anyone and they can operate however they like — with potentially tragic consequences for their members. Here are some of the reasons why you must trade in regulated binary options brokers:

Capitalization

Regulated brokers have to comply with the set minimum capital requirements. The existence of a standard bars fly-by-night operations and other shady operators from making the grade. Substantial capital means that the broker can actually honor its financial responsibilities especially to it members. Far too many sites have been accused of delaying withdrawals and trapping funds within their vaults. Investors must find regulated brokers to ensure that their money is going to a dependable institution that can provide them with excellent service and clear their withdrawals without delay.

Licensing

Every regulated broker is given a license as an official badge of compliance. Inquire whether a promising broker has a license before taking the plunge. This small step will not take much time but it could save a lot of grief in the future. Remember that licenses can be suspended or revoked due to the willful disregard of industry rules. Therefore investors must keep an ear to the ground to learn about the latest news regarding their broker and the regulatory body. Never be complacent as even the best companies can falter due to a change in management and other factors.

Fines

Various penalties can be imposed on erring brokers including hefty fines. These are meant to serve as warnings for errant behavior and dissuade them from repeating the same mistakes. For instance, investors who feel that they have been wronged can file a complaint with the regulatory body which will then investigate the merits of the case. If the broker is indeed found to be at fault, then it will have to face the consequences. Fines are set by the regulatory board to be commensurate with the liability. Unregulated entities no do have to fear such penalties so they can run rampant with their unfair trading practices.

The amount spent by traders on binary options is no laughing matter. The search for brokers should thus be treated with equal seriousness. With all of the scams and other allegations plaguing the sector, it is clear why you must trade in regulated binary options brokers. Protect your funds and your future by placing your money on trustworthy companies.

Investing

Your Portfolio: Time to Cash In?

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Your Portfolio: Time to Cash In?

There is one very important time that you must understand when it comes to your portfolio: time to cash in. You have to know when to take the money out of your investment portfolio to use it, typically for retirement. While some of this revolves around your needs – if you hit retirement age, for example, you have extra pressure to cash out regardless of how things are going – some of it also involves performance and the general trend of the economy.

When this gets tricky is when your portfolio is earning very well. On one hand, you want to get the money out of it before a reversal comes and you lose money. Many people in the United States who cashed their portfolios to retire in 2009, after the recession hit and the market dipped, wished they had cashed out back in 2006. They actually saw their values fall, causing them to lose money that they had previously thought of as their own. Their need to retire still meant they had to cash out on schedule, but they may have even lost so much that all of the money they made in the last three years just became a wash; they would have been able to retire just as well three years before, without working at all, even though they had to live off of their retirement funds for longer.

On the other hand, though, you want to leave a strong portfolio in place for as long as you can. It compounds on itself; the more money you have in it, the more you can potentially earn over the next quarter or the next year. If you start pulling money out, even earning at the same percentage is simply going to bring in less money because there is less to work with. You don’t want to take it out too soon and miss out on those earnings.

The best thing that you can do is to allow your portfolio to get to the point where it is earning enough every year that you can live off of the interest. You can then start taking just the interest out, and you’ll make it all back the next year. This is a sustainable portfolio that can carry you for as long as you need. You may never need to take all of your money out since you have enough to live off of, drastically reducing the financial stress you feel during retirement.

Of course, this is not going to be possible for everyone. If your portfolio is never going to hit that level, you have to make some tough choices, based on the economy and your needs, to cash out at the right time. Just make sure, before you make any adjustments, that you really understand the most important time for your portfolio: time to cash in.

Binary Options Trading Strategies

Profiting from Channeling Price

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Profiting from Channeling Price

Stock channeling is one of the most reliable ways of taking advantage of the market’s tendency to trend. Profiting from channeling price really is a matter of buying low and selling high. This technique helps you to eliminate guesswork from investing.

How Channeling Price Works

Stocks usually move up and down repeatedly in waves between two parallel lines. This is what is referred to as stock channeling. The upper trend line, also known as a high price point, acts as resistance while the lower trend line, also known as a low price point, acts as support. The channel is the area between the low and high price points.

The waves formed by the stock’s ups and downs can become predictable. Investors can profit by buying and selling channeling stocks as they fluctuate. This technique is reliable because it primarily relies on the market’s natural tendency to move up and down. When a stock starts going up in price, investors reach a point where they decide that the price is too high and can decide to start taking their profits. Other investors might decide to short the stock. The reverse happens when the stock starts going down. Investors start adding to their positions when they feel it’s cheap enough while other investors who had taken short positions start to cover their shorts. This type of trading activity works together to keep stocks channeling back and forth. These channels, however, don’t continue on indefinitely. At some point, the channel will be broken and a new one formed.

Before this happen, however, the trader can take advantage of the price swings. The trader will usually buy the stock just after it starts moving up on a cycle and sell just after it starts moving down. This can happen with a frequency of a few weeks or months and the profit gained on each cycle can quickly accumulate to a point where the trader makes handsome profits by the time the channel breaks. Stock channels can last for years thus providing the investor with ample room to profit.

For instance, let’s say an investor buys 100 shares of a stock of company ABC at $15 and sells when it reaches $18. The trader waits for maybe a week or so till the price drops to $15 and sells when it hits $18 again. The trader repeats this two more times and he makes a handsome profit of $1,200 in maybe 6 months or less, which is a very good return from their investment of $1,500.

Stock channeling is a great way for a trader to keep the emotions of fear and greed in check. The high and low points of the channel act as sell and buy signals that the trader executes without having to second guess their decisions. Profiting from channeling price is quite easy since channeling allows the trader to make money regardless of whether the market is bullish or bearish.

Investing

How to Trade Contracting Triangles

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How to Trade Contracting Triangles

When it comes to trading and investing there are a variety of methods used to help traders and investors decide when to enter a trade and when to exit. In addition to these methods there are also indicators as well as chart patterns that can be used to help predict the direction in which an asset or security will go. These predictions help traders and investors decide if a good deal will occur or not and whether or not they should cut their losses. There are a plethora of chart patterns out there that help traders map out and determine market trends. Triangle patterns are commonly used by traders. Triangle patterns form a clear shape of a triangle. They indicate a crossover of two trend lines, ascending or descending and flat. The price of the security wavers between the two trend lines. The most common triangle patterns include the contracting triangles. For a trader to know how to trade contracting triangles they must have an understanding of the market trends as well as the chart patterns associated with contracting triangles.

Contracting triangles refer to those chart patterns where the two trend lends cross over each other after one of them experiences as price brake. For those following the Elliot wave method, this is after wave e ending point. A more specific definition of a contracting triangle indicates that a triangle is a five wave pattern that is labeled with letters A through E. These triangles feature a subdivision of 3-3-3-3-3. These triangles will always occur in a position prior to the last actionably wave that is of one larger degree. For example, meaning wave four out of five-wave structure. Once these triangles are finished they will be followed by a sharp move that is known as a thrust that catapults them into the opposite direction.

Contracting triangles come in two different types. There are limiting contracting triangles and non-limiting contracting triangles. Non-limiting will behave in a slightly different fashion when around the converging trend lines as opposed to limiting triangles. Perhaps the most distinguishing aspect of non-limiting triangle is the congestion that can be found near the apex of the point. For limiting triangles a price thrust after wave e should not be less than at least 75% of the largest wave of the triangle. This is the target of the trade. For non-limiting triangles the price thrust is after wave e does not need to be confined to any set amount. It is usually short lived and corrective. Predictably the price will then return to the original trend. In order to trade successfully with non-limiting triangles it is recommended that a traders target be fast as well as based on other lagers patterns.

Contracting triangles are very common when referring to chart patterns. By understanding how to trade contracting triangles a trader will have a higher chance of making a profit. Trading triangles can be difficult, but with time, effort, and research any trader can master triangle chart patterns.

Binary Options Trading Strategies

Ways of Analyzing Chart Patterns

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Ways of Analyzing Chart Patterns

If you are involved in any kind of financial trading, you will know that you need to find methods of forecasting price movements, in order to know when to enter and exit trades. One of the major methods is the use of charts to indicate price trends, known as Technical Analysis. However, simply looking at charts is not enough — you have to understand about analyzing chart patterns.

Charts in financial trading usually show a sequence of prices plotted over a specific time frame, with the y or vertical axis representing prices, and the x or horizontal axis representing the time scale. Most charts show intraday data — that is, price movements inside the period of a day — or daily data, in which intraday data is compressed to display each day as a single data point. However, charts showing longer periods can also be useful, to provide an idea of historical price trends.

Two of the most popular types of chart are the bar chart and the candlestick chart, both of which provide four specific pieces of information — highest, lowest, opening and closing prices over the period, usually a trading day. A bar chart uses a vertical line to represent the time period, with horizontal bars to the left and right showing opening and closing prices respectively. A candlestick  chart shows the same four pieces of information by using the length of the candle body, and the wick and tail going up from the top and down from the bottom.

One of the clearest types of pattern provided by these charts is the indication of support and resistance levels, which are related to the forces of supply and demand. Support is the level at which prices fall far enough to affect supply, and so stop falling, while resistance is the level at which prices rise high enough to affect demand, and so stop rising. On a chart you can see where a falling sequence reaches a point below which it never drops, which is the support level and a signal to buy, or where a rising sequence reaches the level above which it never rises, which is the resistance level and a signal to sell.

There are a number of techniques that you can learn to use for analyzing chart patterns. One example is moving averages, which make it easier to gauge the direction of a trend by averaging out the data points, thus smoothing out price fluctuations. When a price falls below the moving average, it’s a signal to sell, and when it rises above, it’s a signal to buy. There are various types of moving average, including exponential, simple, and weighted the exponential being the most often used, as it gives more weight to more recent data.

Another popular technique is Bollinger Bands, which are plots on a chart, two standard deviations below and above a simple moving average. The distance between these bands becomes wider or narrower according to the volatility of the market. The closer prices move to the upper band, the more overbought the market is, so it’s a sell signal, and the closer they move to the lower level, the more oversold the market is, so it’s a buy signal.

The fact that prices move in trends is one of the fundamental principles of financial trading, and this is why chart patterns are so important. There are many other techniques for analyzing chart patterns, but these are among the most popular. Successful traders will use three or four, and when they all point in the same direction, you know it’s a clear signal to trade.

Investing

IPO Basics Tutorial

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IPO Basics Tutorial

If you are new to investing, you have probably heard the term “IPO” mentioned in the media. The letters IPO are short for the phrase “initial public offering.” This IPO basics tutorial will help you understand how initial public offerings work and whether you should take advantage of them. The following example shows how an IPO works.

Jim and Mary

Jim and Mary develop an all purpose household cleaner that is made of safe, natural ingredients. The cleaner is so versatile that it can be used to clean dishes, clothes, bathrooms and just about any surface without harming the finish. They sell a few containers to friends and family through home demonstration parties, but the cleaner becomes so popular that they cannot keep up with demand. Customers love the product because it cleans well and is environmentally friendly.

Jim and Mary work long hours in their garage mixing ingredients to make the cleaner, bottling it and packing it. A regional retailer contacted the couple about carrying the product in their stores, but demand will be impossible to meet without a manufacturing facility. They do not have the money to lease the building that they need so Jim and Mary decide that they could raise funds to expand the operation by selling shares of stock to investors. Investors would pay a certain price per share in exchange for part of the profits when the product takes off.

Going Public

Jim and Mary meet with an underwriter (investment bank) that handles the necessary paperwork required by the Securities and Exchange Commission. Eventually they are ready to offer an IPO that will allow investors to purchase shares in their company. This is how they raise the cash needed to move into a small manufacturing plant that will allow them to hire additional employees and meet the demand for their product.

How IPOs Marketed to Investors

When a company is thinking of offering an IPO a public announcement is made to alert interested investors. Additionally, representatives may travel from place to place, marketing and drumming up excitement about the IPO. The media is an important in driving interest in an IPO. Finally, when the big day arrives.

How Do You Get in On an IPO?

If you are a beginning investor, forget about getting in on an IPO when it is offered. An IPO is geared toward institutional investors who can put millions toward purchases of shares. They want to buy low and sell high and have the money to make the huge profits. However, once the stock hits one of the exchanges, anyone can purchase through a broker or an online share trading program.

Just because a company is successful while it is private does not mean that it will make you tons of money when you become a shareholder. You should expect ups and downs. Some IPOs that excited investors initially have turned out to be duds. The purpose of this IPO basics tutorial is to give you a basic overview of how these investments work. If you are new to investing, seek the advice of a qualified financial expert before you invest in any stock.