Many people argue against binary trading, because they consider it to be an irresponsible way of trading and even a form of gambling. To be honest, a component of gambling is involved up to some point, because no matter the skill and knowledge of a trader, there is always a certain amount of luck involved as well. However, unlike gambling, binary trading can actually be largely improved by learning, exploring and investing in your knowledge, not only in your account. Simply betting some money and hoping for the best is not how binary trading was generated in the first place, and there are ways of largely increasing your percentage of success in binary trading, which can be implemented by everyone and which are not conditioned by luck.
First of all, if you want to improve your chances of earning money, the key step is to get educated. You do not need to be an experienced trader or someone who is formally educated in trade, economics or some similar area, but you need to get familiar with binary trading if you plan to make it your money earning method. Even before you create the account with a binary broker, it is highly necessary to get acquainted with the way this trading system works, to gain at least some basic knowledge in economics, to learn all the terms you will encounter during the trading process etc. Keep in mind that, no matter how much you learn before you start trading, there will still be plenty to learn as you go on.
Secondly, it is important to be careful. Binary trading is a popular trading method; therefore many scam websites have been created, such as fake or unreliable binary brokers, inaccurate binary option robots etc. Before you create an account with a broker, choose binary signals or a robot; make sure to read the reviews and other users’ comments, in order to be sure that you are safe and that you will not get scammed.
Then, creating a trading strategy can be highly helpful, not only in the trading process, but also in controlling yourself not to invest or lose too much money. Creating a strategy includes determining the amounts of money to invest, restricting the sum you are willing to lose each day, deciding which options to trade and on what to focus most, keeping a trading diary etc. Creating a strategy can be very helpful because if you stick to it, you alwys know what you have done and it will be easier to realize why something went wrong or turned out right.
Lastly, you can decide to use some of many binary option robots or binary signals. They are sometimes provided by your binary broker, but they can also be found on independent websites, which can be connected with the account you have with the broker. Just like when you choose a binary broker, this is also a situation when you have to be cautious, in order to choose a robot or a signal provider which are accurate enough and which are not scam.
Forex Market is the market where currencies are bought and sold, and the profit is made through the difference in currencies. The currencies are represented as currency pairs in the form of EUR/GBP, for example. This form means that, if you trade a certain currency pair, you purchase the first and sell the second one in the pair, and the other way around. Forex Market is the largest market in the world, and all the purchases and sales are executed over the Internet, while monitoring the trends on the market through the trading platform. Some platforms cost money to be used, while some are offered free of charge and can be used indefinitely, such as VT Trader 2.0TM, used by many forex traders around the world. Therefore, all you need to be engaged in the forex trade is a computer and a stable Internet connection, in addition to knowledge and experience in trading.
There are different ways of monitoring the relation between the currencies. It is recorded on the charts, from which the users can read all the trends and changes in the relation between the currencies. It can be represented as lines, bars, OHLC bars or candlesticks. Today, candlesticks are the most commonly used graphic record, because they provide the most comprehensive and detailed information while they are still easy to read and spot all the necessary data. The charts are available at any time, providing you with real time information and constantly monitoring the ratio of all tradable currency pairs.
Trading in the Forex Market expresses the performance in pips (“pip” stands for “percentage in point” or “price interest point”). Pip represents the difference in price accomplished after the executed trade and the value of one pip is $10. As an example, let us say that you trade EUR/USD. You buy EUR for 1.4300 USD, then sell them and get 1.4370 USD. By doing this, you have made a difference in price of 70 pips, which is 700 USD. Every currency pair changes daily and an average change in EUR/USD pair is 100-250 pips per day.
TheForexMarket has very high volatility, which means that it is subject to large and fast changes over short periods of time. This puts Forex Market in the group of markets with high risk. Therefore, before you get involved in forex trade, it is good to use a demo account, which allows you mock trading without any real loss of funds. Demo platform is available to everyone, so there is no excuse not to use it. Another way to trade currency pairs is through binary options trading, which is today a separate market, but it used to be a part of the Forex Market. With binary trading, you do not buy or sell currencies, but you should guess which currency from the pair will achieve larger value. It is a simpler method of trade, which should provide you with success if you stay informed and gain some knowledge on the concept. A reliable broker is also a must, so choose a licensed one (visit 24Option, Banc de Binary etc).
Binary options used to be a minor part of the overall trading market. However, in 2008 it became a separate trading market, officially acknowledged by SEC (Securities and Exchange Commission). This move has brought many opportunities for this type of trading and created many new traders all over the world. Some brokers specialized particularly for binary trading were founded shortly after establishing binary market as separate, such as Banc de Binary site, which was founded in 2009 in Cyprus.
In the past decade, hundreds of online brokers have appeared. Some of them are very reliable, user-friendly and with favorable conditions, while there are also those that offer less favorable conditions of trading and payouts. Unfortunately, there are many scam brokers as well, which serve only as a camouflage for various financial cheats. Brokers like this are exactly the reason why you should check if the broker has a license before you decide to create an account and start trading. Regulated and licensed brokers provide their users with additional security, making sure that they are not subject to any kind of fraud.
In the beginning, many binary brokers were founded in Cyprus, which was an offshore heaven for companies dealing with money and investments. That is why the largest number of binary brokers still have the headquarters located here, and the reason why most of the licensed brokers you can find online have a license given by Cyprus Securities and Exchange Commission, also known as CySEC.
CySEC is a regulatory body for binary brokers in Europe, no matter the country where their headquarters is located. Additionally, there are many other regulatory bodies for specific European countries, such as CONSOB in Italy, Banque de France in France, Federal Financial Market Services (FFMS) in Russia and Financial Service Authority (FSA) in the UK. There are other major regulatory bodies for other countries and continents, and some of them are Commodity Futures Trading Commission (CFTC) in the USA, Australian Securities and Investment Commission (ASIC) in Australia and Dubai International Financial Center (DIFC) in United Arab Emirates. However, there are some countries that do not have official authority dealing with certification of binary options brokers, such as Canada or South Africa. This is why you need to pay attention to the country of the broker’s headquarters before you decide to sign up.
You can easily find out whether the broker is licensed or not. Any review of binary brokers will state whether they have a license or not, usually in the very beginning of the review. Another way to find out whether they are licensed is visiting the website of the binary broker you are thinking to register with and try finding the information about the license or licenses they have, which will usually be stated on the website. The third way is going to the website of the regulatory body of your country or continent and searching for the list of licensed binary brokers. This is particularly good if you still have not decided which broker to use, but it can also be useful to double-check the broker if you have previously chosen one to register with.
The title of this article may be a bit confusing. 101 is used when you want to explain basics of something, and you would think that I will write about basics of financial accounting, what it is, for what it is used and so on. There you are mistaken, because there are other basics if this area you should know about, and which are overlooked in many articles. These things are overlooked because financial accounting is large field and some things are always left unsaid, and it happens to be that things I will write about fall in that group.
First thing I will explain to you are the purposes of financial accounting, of which there are three:
Production of general financial statements
Production of information which is used by managers to perform performance evaluation, planning and decision making
And production of financial statements for regulatory requirements.
Appart from purposes of the financial accounting there are also objectives that are worth mentioning.
One of the basic objectives of the financial accounting is ( systematic ) recording of transactions within the financial area of business ( book-keeping for an example ). Those transactions are classified and summarized, and used for the preparation of statements, as well as for their analysis and interpretation.
Financial accounting is also used for profit and loss accounting, which includes reports about the state in which business runs at the moment, and evaluation of future of that business ( whether it will run in the loss or in the profit ). Those reports are helpful to owners and stakeholders, which need them to make rational decisions regarding their business. For a simple example we will take a business that is not doing well. If that business is not as profitable as it should have been then they can use those reports to apply remedial steps in order to change the final outcome of that business run.
Statement of financial position is also very important to business owner. It will tell him the position of liability and assets and their expected position in the future. This knowledge is then used to work towards improvement of financial health of his/her own business.
Accounting has an objective and duty to communicate financial results of a business run to stakeholders, and it does it through financial statements. It also aims to help in decision-making by meeting the financial info needs of those that make decisions.
The preparation of balance sheet leads to knowledge of all debts that enterprise owns and debts that others own to it, and it is major objective of financial accounting sector. It is also useful to management because it brings important information about the ability of the enterprise to meet is liabilities, both those in short run known as liquidity position and in the long run also known as solvency position, and the date when they are due to payment.
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As a separate market, trading binary options has been around for less than ten years. However, this concept was formed over thirty years ago, and it used to be a minor part of trading markets, available only in closed forex markets. In 2008, trading binary options was acknowledged as a separate trading method, and that is when it rapidly started growing in popularity all over the world. Some binary brokers, such as Banc de Binary and 24Option site were formed shortly after binary trading was accepted as a separate trading market, and there are hundreds of other brokers established in the past 8 years, in different countries and on different continents.
The key figure in the development and establishment of binary options market was Chicago Board of Options Exchange. It was created by Board of Trade and it was the first to make binary options OTC (over-the-counter) transaction. However, despite becoming OTC transaction, binary trading had not become standardized and acknowledged for a long time. Some regulations were brought, but it was still not enough for binary trading to become a valid, reliable trading system, and the whole process was quite slow and incomplete.
In 2008, the situation was changed immensely, thanks to the Options Clearing Corporation. They created the proposal about binary options market and they filed them with Securities and Exchange Commission (SEC). The proposals were accepted and binary options were at that point accepted to enter major markets, which has brought many changes. The first entity to provide binary options was The American Stock Exchange, and soon after them, Chicago Board of Options Exchange made the same move. During the years over which binary trading was officially acknowledged, this type of trade has been practiced around the world by millions of traders with different educational and business backgrounds. There are hundreds of binary brokers and even more websites where you can find reviews of the brokers as well as the comments of satisfied and unsatisfied users, experienced and less experienced traders, as well as various learning materials.
The concept of binary trading is pretty much the same as it was in the beginning, when this kind of trading first appeared. It is based on duality, which means there is 50-50 chance to make the right choice end finish the trading session successfully. The traditional, most-popular and widely available binary options are High/Low or Call/Put options, which can be found on any trading platform. However, the concept of binary trading is constantly broadening, so there are now other types of binary options as well, such as Short-Term Options, Long-Term Options, Tunnel or Boundary Options etc.
Because of the above mentioned 50-50 chance of making the right guess, there are many opponents to binary trading, who claim that it is actually gambling rather than trading. It can be true to some point, if binary trading is performed without any previous knowledge and by making choices based on pure luck. However, after gaining some knowledge and experience in trading, analyzing market conditions and drawing conclusions from financial news, every binary trader can improve their chances for success and make binary trading a serious, profitable activity, and sometimes even their only source of income.