What Are Binary Options?

What Are Binary Options?

What Are Binary Options? As a beginner you may question yourself about what binary options are and how they may help you to make money to supplement you income or turn into a full time occupation. Binary options are trading options that require you only to predict the direction of the price movement – up or down. If your prediction is correct at the time of expiry, you will receive a fixed payoff. If your prediction is incorrect then you will lose your initial investment and will not receive any payoff. Binary options are some of the simplest trading options that are available; because as a trader you know exactly what you stand to gain, and what you stand to lose.

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The algorithm for binary options trading is quite simple: if you believe that the asset is rising, then everything you need to do is to click “call” option, if it seems to you that the price of the asset is going down, then then you click “put”. For a “call” to make money, the price must be above the strike price at the expiry time. For a “put” to make money, the price must be below the strike price at the expiry time.

The simplicity of binary options enables you to earn money without being a professional trader at the same time it gives you the opportunity to experience trading with different assets such as currency pairs, stocks and commodities, but probably the best feature of this type of trading is that you can control the risks and know the payout and possible loss in advance.

Types of binary options:

  • High-low: The most popular type of trading, where the trader speculates whether the asset price will increase or decrease over a certain time period (until it expires).
  • One touch: The trader speculates, whether the asset price will reach a certain pice over the course of the open trade – before it’s expiration. It doesn’t have to end up at this price, which makes the trade a bit easier
  • No touch: This binary option trade is quite similar to the previous one. A trader speculates, whether during a certain time (the expiration period) the price won’t reach or go over a given limit.
  • Ladder: Treders speculate, whether the price of an underlying asset, at its expiration date, will be higher or lower than the price they’ve set.  The potential risk will increase or decrease, depending on the difference between the price over the time of the purchase and the determined expiration time. This usually makes the profit fluctuate, too. You can get a profit of between 1 and 500%.

One Response to “What Are Binary Options?”

  1. is really good!

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