What is Binary Options?
Binary option trading enables both beginner and experienced investors to make substantial returns from stock market trading. This form of investing grows in popularity by the day, as people from all around the world enjoy the benefits binary option trading has to offer.
The basic idea behind binary options trading is quiet simple, a prediction is made on whether the price of an underlying asset (e.g., stock, commodity, index, currency) will finish above or below a "Strike Price" (The price that an underlying assets holds at the time one commences trading), when the trade expires.binary options trading
As the name Binary suggests there are only two possible outcomes, a prediction is correct or incorrect. When trading you choose to place either a "Call Option" or "Put Option” - A Call option predicts that an underlying asset will expire above the strike price, and a Put option predicts that it will expire below.
With Binary options, the return rate on an investment is fixed. Should a trade expire one dollar or two hundred dollars above or below the Strike Price (depending on the direction selected) the pay off will be the same, it is not proportional to the price at which the option expires.
How to Trade Binary Options
Binary options, also known as digital options or fixed-return options, are fixed-odds financial instruments that allow individuals to bet on the movement of an underlying market asset. The most popular assets traded in the industry are indices, stocks, commodities such as gold, silver and crude oil and gas.
The fixed-returns options industry provide investors a low-cost, low-risk way of betting on the financial markets. Investors receive fixed-odds returns, which minimises the amount they can lose in a single trade. This contrasts with high-risk trading such as Forex and spread betting, which is traded on leverage. Overall, digital options provides a safer way for beginners to bet on the financial markets.
The payout of these trades is determined by the platform before the trade is executed as a percentage, usually ranging from 70-85%. This determines the size of the return for a winning option.
Types of Binary Bets:
This also includes 60-second options, option builder, and weekend options.
High-Low (Call/Put): This is where an individual can bet on whether an underlying asset will finish above (Call) or below (Put) a certain price in a given period of time. .
One Touch: The one-touch option pays out when the underlying asset hits a certain price at anytime during the trading period.
Tunnel or Range Option: First of all the trader sets up a high boundary and a low boundary for his trade. If the underlying assets stays within these ranges for the entire trading period (without touching the boundaries) then he wins a pay-out. The tunnel bet is essentially a way for traders to bet on the volatility of the market.
Target: In contrast to a tunnel bet, a target bet pays out in the money when the price hits a specific level determined by the individual. The trader can either set a higher target price if he thinks the market is bullish or a lower target price if he feels the the market is bearish.
Our Top 3 Binary Option Platforms
Investors should do their research before picking a binary options trading platform. Pick one which will offer at least 65-81% as returns on standard binary option trades.
The major selling point of such trading is that a pay-out is predetermined – the investor is aware every step of the way what they will make or lose.
Pick one which will offer a wide range of assets to invest in and most importantly, keep in mind that customer service is very essential – especially for beginners to binary trading.
Trading with Binary Options has become a major trend in recent years. . As a trader you can select between a wide range of brokers. You can trade options from just $1 making it accessible to beginners to learn with minimal loses. There is no reason why you should not try out binary options trading. You can make huge profits in a short period of time and you can start out small and increase your stakes as you become more confident.
To become successful you have to understand the markets, how the price of an asset is determined etc. You also have to decide whether to focus on a market e.g. Forex commodities or the stock market. A lot of successful traders focus on trading Forex because it’s easier to predict price developments, follow trends and usually the payout is usually higher.