The Basics Of Day Trading Binary Options

The Basics Of Day Trading Binary Options

When you think about trading, you probably think about a friend or relative you know who bought stock months or even years ago, held onto it and now it is worth much more than he or she paid for it. You may look at various charts, noticing the up-and-down movement that corresponds with the movement of the markets. Whether the chart is showing the activity of a month, a year or only five minutes, trading is taking advantage of that movement of the markets.

Image from iStock

Day trading is taking advantage of the movement of the market during shorter time periods throughout the day. Typically, it means trading shorter-term positions rather than longer-term positions. Unlike your friend or relative who bought stock and held it long-term, if you want to day trade, you will buy and sell all in the same day. You may be in a position through the end of the day, for a few hours or even for only a few minutes.

There are full-time and part-time day traders. Some day traders are looking for big trends throughout the day while others are just scalping. Scalping is entering and exiting a trade quickly to collect premium. It depends on the strategy or system the trader desires to use for their personal style of trading.

When deciding to begin day trading, you will notice various products available for you to trade throughout the day. Day trading stocks requires at least $25,000 in margin. Futures margins are a little better, requiring $500-$2500. However, that is the margin; you must also have a larger account and accept a larger risk tolerance. If you want to day trade Spot FX, it requires a large margin and risk tolerance, depending on what you are trading. But, you can open a live account and begin day trading Nadex binaries and spreads with as little as $100.

Nadex binary options are a derivative. A derivative means their product is derived or based on something else. Market prices are based on the underlying related market prices. If you are trading US 500 on Nadex, it is based on CME® E-mini S&P 500 Index® Futures, tracking 500 large-cap common stocks on the NYSE & NASDAQ.

Nadex binary options offers multiple expirations both day and night. Certain forex pairs have five-minute expirations. There are 20-minute, intraday, daily and weekly expiration times giving you plenty of opportunities for day trading.

Keep in mind that you can trade in-the-money (ITM), out-of-the-money (OTM) and at-the-money (ATM) contracts. You also have the ability to exit before expiration, which is unique to trading binaries on Nadex. There are plenty of strike prices to choose from. So, whatever your strategy is or where you think the market is going to move, you have many options to choose from. These are offered with capped risk and great leverage, which makes trading binary options on Nadex a great opportunity for someone new to day trading and/or someone with a smaller account.

This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.