I have been doing some more research into option trading lately. It is a very attractive way to trade if you know what you are doing. Rewards are high and losses can be mitigated by using a simple stop loss (you should be doing this anyway for all your trading!). The idea of simply choosing a direction, i.e. ‘will the stock go up or down today?’ versus a long term hold through our currently very volatile markets seems like a good way to be trading at this time.
I also like the underlying principle that you never have to own the stock, you are simply owning an option to either buy or sell at a given time. Of course this option can be cashed in once the stock moves in the required direction and you are ‘in the money’. Options can be tricky with many many different strategies and plays for the experienced trader, however someone like myself is always looking for a better way to do things.
I started looking into online options trading, there are various places around the Internet that offer digital trading (also referred to as binary options) and I was especially impressed by TraderXP Australia.
They have a very professional website which is always a great starting point in my opinion and they have various informational pages for us noobs to read and familiarise ourselves before plunging in. For example it is worth a visit to their page explaining what a binary option is - How to trade binary options?
The Binary Option is in essence nothing more than a prediction on which way the price of a stock, commodity, index or foreign currency will move by a designated expiration time. You never purchase or own the asset as you’re only predicting the direction that the asset will go. There are only two possible outcomes and the price of the asset does not matter. As far as you’re concerned, all that matters is if your prediction was correct or incorrect.
The site offers Online Assistance, 24/7 support, Guided Tours, Free E-books, FAQ, A disctionary, A daily market review and even an iPhone App! In fact I have bookmarked the market review page as a nice morning read with my coffee. I am always after as much information I can get before the markets open each day and there is another great piece of FREE information – Daily Market Review
Of course I recommend you do your own research (as you should with ALL your investment decisions) before entering into any online trading, yet I continue to be impressed with the forward momentum of what is available on the Internet and what it can offer us traders to make our life easier.