Binary option is a financial instrument that can use you to gain large profit within less than hour. In the recent months we hear more and more about trading binary options and people how are using this financial instrument are reporting large profits; the main reasons for that are the simplicity of trading and the possibility to gain 75% within less than 1 hour.
In you don’t know what binary options are, the name itself should tell you something about the meaning of binary options, like in the binary code that uses only 2 digits “0” and “1” in trading binary options you have only 2 options:
1. Prediction that the price of an underlying asset will go up: This is called binary call option.
2. Prediction that the price of an underlying asset will go down: This is called binary put option.
The fact that trader has only 2 options “Call Option” or “Put Option” makes things much more simple, a trader don’t have to predict which asset will provide him the best profit or how much it will go up or go down, what he have to predict id only the direction of the asset market price, in other words he have to predict if the price market of a certain commodity, stock, index or currency will go up or go down during the time passes between the time he bought the option and it’s expiry time (in most assets traders can choose from hourly expiration time and daily expiration time.)
Another different thing that make binary options such a popular financial instrument is the huge payoff, when trading binary options the profit you get upon a successful prediction is 75%, that’s tremendously high comparing to other forms of investment as Forex.
So as for the main question how do you improve you chances to predict if the price of an asset will go up or down?
One of the most important rules in trading binary options is choosing the assent for your investment, the more you know about the asset, the most likely for you to be able to predict its direction, try to read some information about the asset before buying an option. Learning about the company background and sector will teach you a lot about what might happen in the next trading day or hour.
Another thing that might be helpful is reading past charts, but you had to be careful about it because sometimes things change pretty fast, even a stock the fall by 5% in a day, might go up again if there is a reason for that and sometimes even without any particular reason.
One more important thing you can do is to read financial news; websites like the “Yahoo Finance”, “CNN Money” and “Financial Times” can give you a good analysis of the market, this will help predict if the direction is up or down.
Another source of information can be binary options trading sites, in some sites like GlobalOption.com you can find a daily tips that would help you with your prediction.