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Making Money with Binary Options Trading

Binary Options Trading, High Leverage, and Basic Options Trading Tutorials


High Rate Investments
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High rate investments for high return investing nearly always require leverage. With a few exceptions though it is possible to earn very high yields without the same kind of high risk leverage implies. We also look at lower maintenance leveraged ETFs which offer similar results with less maintenance.


High leverage investments offer the highest rates of return for a varying amount of risk. Check out this video and get the low down on the most commonly used high leverage investments available to low capital investors.


 

Options Trading as a Way to Create High Leverage


Options trading is one of the most popular high rate investments given it has the ability to create customized leverage for the day trader. Depending the ratio between the call or put premium on the option and the strike price of the option a trader can create virtually any leverage ratio imaginable provided there is a counter-party to the trade.

The great beauty of custom tailoring your own leverage position is that the investor chooses which security at which price and how much buying power (leverage) to execute. The greater the leverage ratio, the more chance of creating a high rate investment yield.

The downside of taking a high leverage position with an options contract is the potential for losing the entire investment - should the contract expire out of the money or the trader has to unload the contract for a loss.


High Rate Investing: Margin Trading


Buying Stocks on Margin or Treasuries - High Risk

Another high rate investing strategy is to buy on margin. What does buying on the margin mean? This is simply a case where a trader puts up some cash or other collateral to make a trade, and his broker puts up the remaining cash to cover the cost of the desired position.

For example: A stock trader might wish to buy $2000 worth of securities but only has $1000 cash. The trader may then buy the $2000 worth of securities, pledging the $1000 as collateral. His broker then lends him (essentially) the other $1000 to complete the trade. This would be a case of 50% margin, or a 2:1 leverage ratio. (more on margin trading and leverage).
 

Leveraged ETFs Offer High Yield without Margin


Another very popular high yield investment is called a leveraged ETF. What this type of investment does is uses margin to amplify the return on investment of the underlying asset - without YOU (the investor) having to open and maintain a margin account and positions. This is a great way to get higher yield with a low maintenance account. Be forewarned however, as losses (like any other leveraged investment) are amplified as well.


High Rate Investments without Margin

Binary Options

A last (and relatively new) form of high rate investment is the binary option. Binary options offer a high rate of return on a short duration investment (sometimes less than an hour). The beauty of this type of transaction is that the trade is done on a fixed dollar amount contract size with an extremely short expiration (hour, day, or week) and yields approximately 60-200% depending on the duration of the contract.

Binary options have become the investment du jour of day traders because of their quick turnover and instant high yield.


Understanding Basic Trading Relationships - 3 Systems for the Modern Trader
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Certain elements of day trading are not rocket science, although a good amount of research has been done to establish some basic trading relationships between a number of different assets. In fact this sort of grind-it-out statistical researching has been the basis of profitable stock picking for years. Lately though the markets have become much more correlated, making individual asset picking much more difficult. Successful traders have reacted to this change by focusing much more on market psychology and current events rather than corporate earnings data.

Three Types of Known Market Relationships

Macro Trading

Macro trading relies on making extremely short term investments in the marketplace in an effort to get ahead of changes in market psychology. The major theory behind macro trading is the extremely high correlation between risky assets today. Basically what this is saying is that the entire world of investment has begun to function like a "Risk On / Risk Off trading signal". Either all the markets for risky assets are up, or they are all down (with 'safe' assets like gold, the Swiss Franc and the US dollar performing opposite). The ultimate form of this kind of investment for retail traders comes in the form of 60 second options. These are a special subset of a type of contract known to traders as binary options.

Carry Trading

This has become one of the biggest global phenomena, and in part is a principal reason for the current financial meltdown in Europe. While forex trading is a relatively novel concept to US citizens, it's practically part of daily life virtually everywhere else in the world. Borrow money in a low interest rate asset (foreign currency or otherwise). These days the modern experts at this style of investing are the Japanese and the Chinese. Other countries have tried their hand at it (read: Iceland amongst others- see Michael Lewis' excellent works for more on that) - most often with disasterous results. As we spoke above psychology rules markets today and entire networks have been setup and designed specifically for the purposes of manipulating market psychology. This is one of the reasons so many people trying to hold margined carry trade positions get blown up. Pyschological changes in the marketplace creates volatility which blows up positions which require quiet, predictable and relatively stable activity.

Credit Default Swaps

On the theme of the aforementioned European sovereign credit meltdown a new type of instrument has been created: the Credit Default Swap, or CDS. These securities are particularly nasty for non-traders because they are fully designed to be abused in the marketplace. Credit Default Swaps are essentially insurance against the possibility of a debt issuer defaulting on their agreement to pay. Of course you may think that sort of asset would be prudent for a large investor or hedge fund to hold, and in a rose-colored world you would be right. On the other hand, imagine a case where a person (B) owns an insurance policy on someone other than themselves (person A for example). Imagine further that the policy only pays out to person B in the event of the death of the insured person A. Imagine further that person B has no economic interest in person A other than the insurance policy.

Given those circumstances... what exactly do you think would be the expected lifespan of person A? Very short: exactly. Now in the case of CDS securities, the above hypothetical situation is EXACTLY what we have in the real world - only the word person above is replaced by either corporation or government. It turns out that people with vast access to capital have the ability (and clear motive) to not only own CDS assets - but also to influence the likelihood of those CDS policies to pay off. It is seen frequently in central bank exchange rates in the market.

Binary Options Signals Tips
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It would seem binary options signals are a popular topic these days. I had seen more than a few mentions of the concept of binary options signals around the web - but for the most part I ignored them - after all, I had been working the screens for so long I had my own systems and methods for trading so why bother, right? Well oddly enough I got to thinking about it and it was suddenly obvious to me what was making this new service so popular: convenience. The average trader knows what a nail-biting grind it can be to sit in front of a terminal all day. Using a signals service to make the calls for you can take the worst of the emotions out of your trading style.

Economics of Binary Options Trading Signals

In order for a service like a binary options trading signals service to be worthwhile it has to be economical for day traders. Being economical isn’t just a function of cost either, although cost is important. What other factors might be important to make trading alerts economical? How about the frequency and timing of alerts? Are the alerts coming in often enough to make a consistent trading profit? Is your contract size (capital commitment) per trade enough to justify the use of trading signals? Is the yield at your binary options broker high enough to make your service’s signal accuracy rate profitable? How high is the accuracy rate of your binary options signals service in the first place?
Any or all of these factors can play a roll in whether using a trading alerts service is worth your time.

Binary Options Signals Video

Here are some of the thoughts I describe above put into a video I found the other day. You can also see the results of the binary options signals study. I think the real takeaway here is that there are levels where a binary options signals service is appropriate to use - both in terms of economics and convenience. On the other hand, there are capital levels and trading frequency levels on the low end of the spectrum where it simply doesn’t make sense to use them. Where you end up on the spectrum depends on how much time you have to commit to day trading and whether you have enough capital (think around $1000) to make a living at it using just a signals service alone. One thing is certain, however: there definitely IS a trading frequency, capital level, and signals accuracy rate where using a premium daily binary options signals service makes sense.

Day Trading Options System - 3 Basic Profitable Strategies
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The point of developing a day trading options system is to create opportunities to make money. There are lots of strategies that work and a number of markets to work in but which ones offer the best chance of success with a balanced level of risk and time commitment? Let's look at three strategies and take a look at the strengths and weakenesses of each day trading options system.

Market Timing Index Options Using Forex Trading Signals


One of the earliest strategies I used as a trader involved watching the movements of forex markets and using those signals to guide my trading. I personally still use this method today. The idea is to follow the movements of what traders would call "funding currencies" (presently USD and previously JPY). When traders in the big forex markets were taking on risk by borrowing in the funding currencies (ie shorting them) then it was considered a safe bet that trading for the day was going to be "risk on" - ie safe to pick up options on the major indexes (DIA, SPY, etc). It was a daily grind to make money day trading index options this was but it worked.

Using Deep in the Money Options for Modest Leverage


Another reasonably reliable day trading options system involves buying deep in the money options, creating modest leverage on trades. See the options trading leverage tutorial for better understanding on creating leverage. The point is that in order to overcome the transaction costs which make low capital day trading impractical you use in the money options contracts to amp up your buying power and increase potential earnings. This carriers some risk (like any investment), but again, it's a strategy that works.

Day Trading Options System Using Binary Options


A last and extremely low cost day trading options system involves trading binary options. There are multiple ways to use binary option contracts either as stand-alone investments or in combination as hedge trading strategies. While many people are unfamiliar with using binary options. The major blessing of working with simple binary contracts is that trade increments can be as small as you like (effectively as little as $30) but can still be profitable (yielding 60-85%) because there are no commissions to pay.

Any day trading options system is going to carry some significant level of risk, but many times the profit is worth it. I have had good fortune using a day trading options system or two in my lifetime and I hope some of the ideas above make sense to (and cents for) you.

Options Trading Tutorial: Binary Trading
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I was wondering if I'd ever read a trading options tutorial that wasn't impossible to understand. It turns out that if you look for more simplified forms of options to trade the math isn't that bad.

Simple Options Makes for Math-Free Options Trading Tutorials


If you're like me you hate lots of math. Give me the basics and I can handle them ok but when it comes to trading with my money I don't want to be relying on Poindexter to get the numbers right. I've been looking for something that allows me to trade on the fly and react quickly without having to continually figure out prices.

Thank You for Binary Trading


Binary trading is about as stripped down a style of options investing as you can get. No complex pricing computations, no beta, or alpha, or any of that other lingo. The concept is easy to grasp: if I think stocks will go up I go long a call, otherwise I buy a put. Whatever position I end up holding I find out in a little while whether I make or lose money. That seems simple enough. I don't have to figure out when to sell, I don't have to figure out how many shares to buy. All contracts get ridden out to expiration and then paid out. Ready for the kicker? The return on investment is fixed too! Most securities pay out 60% or more.

Finally a Trading Options Tutorial for Beginners


The point of this long harangue was that eventually I did find a trading options tutorial for these simple to trade securities. I've been working through it for a couple of days now and it's pretty good.

Links:
Binary Options
Options Trading Tutorial
High Rate Investments
Forex Signals Trading


Binary Options Trading - Why It Is the Investment Alternative to Making Money Trading Stocks
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Making money trading stocks is harder these days given the continuous intervention of governments and central banks. These deep markets and government policy institutions have great sway over the movements of the equities market today. As a result less well capitalized investors seek other investments to make their fortunes.


 

Options Trading as a Way to Make Money Trading Stocks


Options trading is the investment du jour for traders looking to get high returns on investment from small investments. The key to making big money trading options is by controlling large quantities of stock without having to put up all of the money needed to actually own those shares. One drawback of the options trading market is the vast number of firms holding contracts which ultimately become worthless.

Investors new to options trading quickly find that if they don't invest in blocks large enough, gains get swallowed up by transaction costs. Thus day traders of options typically need to put at risk at least a minimum of a thousand dollars at a time to make it worthwhile. Day trading robot programs and high frequency trading servers have made profiteering in options trading considerably more difficult than in prior years.

How to Trade Options with Minimal Capital


Trading binary options offers people with little money to trade with the big boys, and likewise forex trading allows enough leverage to make currency trading worthwhile. While both of these markets require very little money to start, the forex market truly should be left to the professionals, given its complexity and the extremely high leverage involved (more info on forex margin accounts).

Trading Binary Options


People familiar with European options trading will be familiar with many of the characteristics of a binary option. A popular difference between European options and binary options is there are no fees or commissions trading binary options. Because yields on binaries are in the range of 60% and up even a small $200 trade can earn over $100 a day.

Learn More about Making Money Stock Trading:
Day Trading Options For the Highest Return Investments
Forex Binary Options Trading
Trading Strategy Binary Options - Scenario for a Successful Binary Options Strategy
Forex Margin Examples

Day Trading Forex Trading Signals and the Stock Market
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Day trading by forex trading signals in the new millenium requires a better understanding of market forces than ever before. Capitalizing on knowledge of forex market movements involves learning relationships and executing prepared strategies ahead of the capital movements.

Understand Forex Market Movements


Smart day traders pay attention to forex markets in order to gauge market direction. Given the vast amounts of money that move in the foreign currency markets it only makes sense that currency movements have a major impact on stock prices. In today's market, suffice to say awareness of forex market activity is critical to staying ahead of the game.

What Does Forex Matter to the Stock Market


The long established pre-eminensce of the USD has negative impacts on stock prices. Day traders are always mindful then of USD movements globally. While Tv money show hosts talk about the importance of a strong dollar in reality that is not helpful for the jobs market, particularly in the better paying manufacturing sector. An inflating USD dollar, by contrast is weaker against foreign currencies but generally improves the business/price competitiveness of US companies.

Making Money with Forex Trading Signals without Trading Currencies


The key for any trader then is to capitalize on well established forex / equities relationships and grab small quick profits. This used to require lots of capital - not anymore. Traders of all sizes have a much wider variety of tools including options, ETFs, and mini forex accounts which help keep them abreast of the market and nimble enough to react to market imbalances. Even the most modest amount of capital has enough buying power in the right market and account setup.

Why People Use Forex Trading Signals in Non-Forex Markets


Why do investors use forex trading signals? Do you try to image what the big boys are betting on in the stock market when you get ready to make a trade? Here's a hint: they're forex traders - and when they trade, worlds move. Many times traders try to disguise their actions to hide their true intent however the size of transactions tends to make this difficult - hence alert traders can see big moves as they're happening. This is a big advantage. It is a money multiplier effect. A leveraged forex trade is akin to a loan at a bank which results ultimately in a deposit somewhere else in the system. Deposits (the offset to the loans made) get invested elsewhere, driving up asset prices with increased demand (or alternatively increased supply of currency). Ripples like these are seen (and used) on a daily basis by computers and day traders alike.

How Little Fish Compete


Here's an example of a forex trading signal post. Whether a trader works with regular options, binary options, or stocks - forex trading signals always play a roll in determining short term direction bias. Ultimately forex trading signals direction, whatever the trade of choice.

Other posts on finance/trading:
Make Money Trading Online with Swing Trading or Is There a Better Way
Think You Can Make Money Trading Online with Swing Trading or Is There a Better Way
Options Trading Why Managing Cash Is Critical
Trading Binary Options - Call and Put Option Saddle Hedge

Make Money Trading Online with Gold or Is There Another Way
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Info on trading gold onlinePeople trying to make money trading online are being told there is easy money in forex or gold or oil. The most hyped method is forex (or foreign currency) but in reality that is a losing proposition more than a winning one for average traders. Then there is the shiny golden metal that is supposed to be an inflation hedge or doomsday currency of last resort but investors will find (as they always do) that when the turmoil dies... so does the demand for gold. So this too is more pyrite than bullion however because the devotion to gold is more of a world-wide religious zealotry than fundamental truth. Swing trading is another big hype online trading strategy.

What's The Best Way to Make Money Trading
How much risk can you handle? Your skillset and your assets play equal roles in finding your best chances for success. Do you have the right knowledge, assets, and stamina to succeed in gold? Knowing your skills and assets and applying them to the best opportunity in the market is every investor's challenge. Compare your assets to the requirements of some high profile trading strategies.

What Is Needed to Succeed In Forex?
The forex trader has to have the ability to manage funds in a quick moving market, paying close attention to global events and key cross rates and commodities relationships. High pressure is also a fixture of the forex trading account - due to the extreme leverage positions. Positions in forex accounts require continuous attention, whether via an auto forex trading robot or a series of marathon all-nighters.

Are You a Gold Finger?
In the case of a gold trader the skills required to be successful might include a strong knowledge of seasonal supply and demand trends. Sources of supply - such as central governments and or mining companies - bear constant scrutiny for news about supply issues and potential disruptions. Lastly it would require a good understanding of specific macroeconomic factors such as interest rates, inflation, and the core US dollar cross rates (EUR and GBP for example).

What about Swing Trading
The swing trader watches market movements - direction and size - and then makes extremely short term trades with the market pushing it further in the same direction - then exiting at peaks and troughs accordingly. This type of investor focuses on highly liquid securities and worries much less about the macroeconomic and financial fundamentals and instead concentrates on the microeconomic forces moving a single specific security.

What about Binary Options
A less hyped but highly effective way to act using minimal capital is the use of the binary option. These ultra-short term investments have a duration under an hour or under a day and pay 60-75% yields.

More on high yield investing:
Commodities Option Trading on the Cheap -- Small Capital Options Trades
Option Trading References
Binary Option Trading Systems Change with Market Flutuations
Binary Options Trades - Rapid Fire - How Much Is Too Much

Investment System That Beats Forex with Ease
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Savvy traders are making the easy investment choice of using binary options to day trade stocks. There are a couple of things that make binaries particularly well suited for day trading activities -- namely the extremely short holding period (typically an hour), the high rate of return (typically upwards of 60%), and the ability to trade freely without commissions or pricing spreads to worry about. Someone must have been listening to the needs of day traders when binary options were designed.
Every Options Broker Is a Little Different
Getting started trading involves finding the right broker who carries the securities you're interested in. Given the relatively small size of the present market only a select few options are offered - and then only on the most recognizable, most highly liquid stocks (think Google, Microsoft, VW, BMW, GE). Still other brokers cover commodities and foreign stock market indexes. All these assets share one thing in common: liquidity. People know these companies well and trade them continuously. These days even some popular commodities are available on binary options exchanges.
Paring Down the Unnecessary Barriers to Swift Trading Makes Traders Happy
Trading in even dollar figures is another factor in making binaries an easy investment. Like many of the other features of binary options, contract size is designed to reduce complexity. . .
Small Cap Traders Find Binary Options Profitable
Imagine investing just a hundred dollars. Is there any other asset you could make a reasonable return on consistently with just a one day holding period? Eliminating transaction costs and fees makes "small ball" investing equally profitable as whale investing.

Day trading binary options is an easy investment because it is a no commission, no spread, virtually no math way to invest. Learn more in our options trading tutorial.

Other Articles on Day Trading:
Basic Options Trading Terminology
Commodities Option Trading on a Budget -- Low Capital Options Trades
Executing Binary Option Trading - Rapid Fire - The Sky Is the Limit
Cheap Stock Trading - Why Options Are More En Vogue

Commodities Option Trading on a Budget -- Micro Capital Options Trades
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Investors are making money commodity options trading using far less capital than typically one might think necessary for these high profile investments. Familiar commodities such as gold, silver, and oil are available on binary options exchanges. While other markets might require thousands of dollars of capital to invest, these binaries require as little as $100 to participate in the market.

Common Examples of Commodity Options Trading on Binary Exchanges


Anyone interested in getting involved in commodity options trading would certainly want to see the big three commodities (gold, silver, and oil) trading. The big three have been added to some traders' desks and volume is increasing on those securities as more investors become aware of them.

Investments in Gold Are High Risk/High Return Investments


Depending on the contract terms, binary commodity options traders learn to like the high yielding short term simplified nature of these options trades. Traders investing a hundred dollars at 11:15am on Wednesday might expect to earn around a seventy dollar profit (over and above the initial $100) on any contract expiring in the money.

Even the Losers Get Lucky Sometimes


All is not lost for investors whose gold or oil binary option goes sour - as sometimes up to 15% of capital is returned on OTM contracts. The 15% pay back on out of the money contracts makes for some interesting possibilities when it comes to hedging.

See an example of how the OTM payout is used in binary options trading.

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