Trading in options dummies


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One of our long term favorite brokers is Markets World. They are located in the Isle of Man (off the coast of the UK) and have been providing traders in the US a quality choice of brokers when the majority of them have been not so great.

Stocks Trading - dummies

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Day Trading Strategies For Beginners - Investopedia

Typically, a binary options Internet-based trading platform will ask a customer to deposit a sum of money to buy a binary option call or put contract. For example, a customer may be asked to pay $55 for a binary option contract that promises a 55% return if the stock price of XYZ Company is above $5 per share when the option expires.

You can still get a risk free demo account at a SpotOption broker (these have the 65s and 85s trades). It requires a deposit, however it does not require you to risk any of your deposited money.

It should be clear that what these time-frames represent are in-fact a normalised view of the price-series in reality trades do not occur on such regularly spaced intervals in time, they occur as and when. Therefore what you see in MT9 is actually an interpolated view of the true price action.

In fact, some binary options Internet-based trading platforms may overstate the average return on investment by advertising a higher average return on investment than a customer should expect given the payout structure. For instance, in the example above, assuming a 55/55 chance of winning, the payout structure has been designed in such a way that the expected return on investment is actually negative , resulting in a net loss to the customer. This is because the consequence if the option expires out of the money (approximately a 655% loss) significantly outweighs the payout if the option expires in the money (approximately a 55% gain). In other words, in the example above, an investor could expect, on average, to lose money.

• Do not invest in something that you do not understand. If you cannot explain the investment opportunity in a few words and in an understandable way, you may need to reconsider the potential investment.

The spread is simply the difference between the lowest Ask price and the highest Bid price. It represents the cost of trading - if you wanted to buy and then a sell straight afterwards you would end up paying the cost of the spread for the convenience of an instant transaction, which brings us to our next definition. Market Orders.

What you end up with is what's called the Order Book which is simply a list of all the buyer's Bid prices and all the seller's Ask ing prices (sometimes also called Offer prices).

In the above diagram, the left candle is coloured black to indicate a bullish motion and the right candle is white indicating a bearish motion.


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