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Business

How current affairs are driving a new breed of binary options traders

 

Source: Pexels

Over the last year, there’s been a global uptick of interest in trading on financial and asset markets. One of the quickest growing verticals in the trading sector has been binary options, partly due to the fact it’s quite simple and accessible for beginner traders. Also because they don’t have to trade on unfamiliar assets like gold or the Euro, rather they can trade on the outcome of current affairs and events.

What are binary options?

A binary option is, as the name would suggest, an option in trading whereby the trader has one of two options. Typically, the question behind the trade will be a yes or no question. This could be “will it rain tomorrow in New York City?” or “will the value of the dollar decrease by Friday?”. With these kinds of questions, there is only a yes or a no option. Therefore when they are prepared as a trader, there are only two outcomes: getting it right and getting a payout, or getting it wrong and not getting a payout.

Almost anything can be used for binary options trading. Popular binary options include the value of currencies, cryptocurrencies, commodities, stocks, and other assets.

It is perhaps one of the easiest trades possible as there are a limited amount of outcomes. This has made it very popular with beginner traders or those that are new to the financial markets. That doesn’t mean there aren’t still nuances and tricks to understand before real money is traded.

How can beginners start trading binary options?

Source: Pexels

Beginners need to start by understanding the market but also having the opportunity to place binary trades and to see the outcomes. This is most effective when done without using ‘real money’. For example, a demo account allows the trader to practice different kinds of binary options trades using fake money. This facilitates the development of a trading strategy and also gives them valuable hands-on experience before they start using their own funds.

In conjunction with using a demo account, it’s wise that the trader reads a selection of FAQs and guides to trading binary options. Most reputable trading platforms will provide this in an endeavor to help customers become savvier and more knowledgeable. They can also find plenty of information on platforms like YouTube, Instagram, and forums such as Reddit.

Last but not least, they must try to stay up to date with economic, political, and financial news, all of which could impact their trades. Knowing when important events will take place and how these could impact the asset, will help them to make smarter decisions. Additionally, it will help their financial literacy which in turn is important when analyzing charts and forecasts.

The current trends

In the last couple of years, there has been a big increase in people wanting to trade on current events. This includes political appointments such as election outcomes, social matters, and even matters such as who would get the first patent for a COVID-19 vaccine. The possibilities are quite endless and it provides an interesting angle for traders whose interests go beyond commodities and stocks. For example, there was a spike in activity in people trading binary options on whether Joe Biden would win the US elections. Others speculated whether Trump would concede, and some have traded on whether the UK would finally leave the Eurozone.

These are just a few examples showing that trading binary options doesn’t have to be just about stocks, bonds, and currency. An accessible way for traders to get to grips with the markets, binary trading is expected to continue growing in popularity.

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