• Binary options have rapidly become one of the most popular forms of trading.
  • They offer a faster, simpler alternative to traditional financial trading.
  • This simplicity makes binary options a great way for new traders to get involved in the financial markets, and they offer many exciting opportunities for experienced traders too.
  • However, before you open your first trade, it is important to learn about the basics of binary options.

Take a look at the paragraphs below for more information on this rewarding trading option.

What are Binary Options?

Binary options are trading contracts that offer fixed rewards and known risks. You will receive a payout by correctly predicting the price movement of the underlying asset – the magnitude of the price movement does not affect the payout. If your prediction is incorrect, you will only lose the amount you invested. Your prediction is based on whether you believe the price will move up (for call options), or down (for put options).

Types of Binary Options

You can trade any type of asset that is offered at including currencies, commodities, stocks and indices. There are also several trading products and methods that offer different expiry times and payouts including standard binary options, speed options, pairs, one touch, long-term and FX/CFDs.

How to Trade Binary Options

First, you need to choose the underlying asset you want to trade. Next, you will choose the duration of the trade which can range from 60 seconds to a week or longer. You will then select how you want to trade – whether it is a traditional binary option, one touch or another available method. Finally, you will choose your investment amount, and open your trade.

Tips for Trading Binary Options

It is important to understand the underlying asset you are trading and the market it is trading in. In addition, it is important to diversify your trades by focusing on different assets, preferably in different markets to reduce your risk and maximize your profits. Finally, it is important to learn how to interpret the market through daily news updates and market analysis.

Why Trade Binary Options?

Because binary options have fixed risk and fixed reward, you will always know how much you stand to lose and how much you stand to gain. Additionally, there are only two possible outcomes: this makes binary options simpler than traditional trading options. Lastly, binary options allow you to generate a profit in upward and downward-moving markets.

What is put|call option?

A put option is a contract that specifies the price of an asset will go lower to produce a profit for the trader, while a call option is a contract that specifies that the price of an asset will go higher to produce a profit for the trader.

What is option expiry rate?

This is also known as the payout and is the amount that the option pays at expiry if it meets the conditions of the contract.

Published: October 28, 2014, 15:30 | No Comments on Investment

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