Binary option trading has the potential to be rewarding. The concept for currency binary option trading is simple: The trader is predicting one of two options when entering a trade; whether that particular currency pairing will be above or below a specific entry point.
If the trader is predicting whether a particular currency pairing is going to be above the specific entry point, at a determined expiry, it is termed a "call" trade.
If the trader is predicting whether a particular currency pairing is going to be below the specific entry point at a determined expiry, it is termed a "put" trade.
The expiry time period of a trade, as mentioned above, is determined by the trader based on the broker availability for the trading platform.
Brokers may choose to have available expiry times that range from time periods of 60 seconds, to a couple of hours a day and beyond. The experience and expertise of the trader, along with their preference and comfort level, will help determine which expiry time period is most suitable for their needs.
The binary option currency trader must also decide which currency pairing to trade.
The determination can be solved by analyzing several factors. The trader may determine which currency pairing will best suit the needs necessary to achieve profit.
The available trading sessions and optimal time frames for trading may depend on the trader's time schedule. The currency trading markets open and close at various time frames that are determined by the region's financial markets. Binary option trading of currencies is an international financial endeavor that can be easily accessed from laptop, desktop computers and various other mobile devices.
The trader may monitor several currency pairings in one trading session in order to analyze technical trends and indicators of a particular pairing. Once a favorable trend is analyzed and confirmed through the signals and indicators, then the trader will proceed with entering the trade with a "put" or a "call".
Once the trade is entered, the trader must wait for the currency pairing trade to expire based on the chosen time period. After the trade reaches the expiry time period, it will be determined whether the executed trade was predicted correctly.
If the trade was predicted correctly, then the trader is considered to be "in the money" and has reaped the benefit of profit on that particular trade. If the trader has predicted the "put" or "call" trade incorrectly, then the amount of the trade is forfeited (minus any amount the selected broker credits back to the trader).
There are many variables involved in the dilemma of binary option trading that include fundamental and technical analysis. Yee Kok Siong observes that the dilemma of which variables to analyze in entering a binary option trade may be effectively deciphered through study of market movement and conditions, experience, planning and following a successful system.