Up
or Down
Binary options trading requires the
trader to speculate on whether the price of an asset, (a product traded on the
financial markets, e.g Facebook stock or the Euro), will rise or fall within a
given time frame.
Basically, the trader asks a very
simple question. Up, or down?
Unlike
traditional options, where the payout is based on the price of the option at
expiry, and each increment that the asset continues to rise or fall can have a
huge impact, binary options are all or nothing, where correctly predicting the
direction is all that matters. There
are only two possible outcomes with binary options, also known as Digital or
Fixed Rate Options (FROs). The possible payout is already fixed at the time of
opening the trade. With traditional options, there is no way to know in advance
how much will be risked or earned on a trade, but with binary options the
trader knows in advance, and can control, the exact level of risk involved. The
trader is given the option to select the risk percentages for every trade,
determining for example that they would prefer a 65%:20% return ratio, or a
70%:10% payout, with a 70% return on an in-the-money outcome and a 10% return
on an out -the-money result.
Pick
and Mix
Binary
options traders can pick from a range of up to 180 assets when deciding what to
trade, including currencies, commodities, stocks and indices. Multiple trades can be open at the same time, each for a
different type of asset, or the trader can choose to focus on a single trading
product.
Easy as 1, 2, 3
Binary options trading is incredibly
straight-forward. If you think that the underlying asset is going to go up
in value during the set time period allotted for the trade then hit the green
CALL button. However, if you think that its value is likely to drop over the
given period then hit the red PUT button. If you predicted the direction
correctly, then your contract is “in the money”, when it expires, and if you
failed to correctly predict the outcome then it expired “out -the-money”.
Making a trade is done in three easy steps.
1st – Pick an asset to trade- any currency, commodity, stock or index.
2nd – Make a prediction- CALL or PUT.
3rd – Choose the amount you want to trade- then click APPLY.
Binary options trading is incredibly fast-paced. No download is required, so set-up is quick.
The process of making a trade is also very brief, while offering high payouts in a short space of time. Trades can be made with a wide range of expiration times. Traders who prefer the adrenaline rush of the fast trade can opt for daily, hourly, 15 minute expirations and even those that from start to finish, take a matter of seconds, while the longer term trader can select, weekly, monthly and even end of year expirations.
More experienced binary options traders decide what to trade and then anticipate the direction it will take based on news events. For example, above average rainfall could impact the sale of agricultural commodities like wheat, while political upheaval in an oil rich region could impact the price of Crude Oil. Additionally, major economic announcements, or reports published on a regular basis, such as unemployment rates may impact a country’s economy and effect the whether its currency rises or falls. Even a new Apple announcement on the release of the latest iPhone OS can impact stock rates.
Making a trade is done in three easy steps.
1st – Pick an asset to trade- any currency, commodity, stock or index.
2nd – Make a prediction- CALL or PUT.
3rd – Choose the amount you want to trade- then click APPLY.
Binary options trading is incredibly fast-paced. No download is required, so set-up is quick.
The process of making a trade is also very brief, while offering high payouts in a short space of time. Trades can be made with a wide range of expiration times. Traders who prefer the adrenaline rush of the fast trade can opt for daily, hourly, 15 minute expirations and even those that from start to finish, take a matter of seconds, while the longer term trader can select, weekly, monthly and even end of year expirations.
More experienced binary options traders decide what to trade and then anticipate the direction it will take based on news events. For example, above average rainfall could impact the sale of agricultural commodities like wheat, while political upheaval in an oil rich region could impact the price of Crude Oil. Additionally, major economic announcements, or reports published on a regular basis, such as unemployment rates may impact a country’s economy and effect the whether its currency rises or falls. Even a new Apple announcement on the release of the latest iPhone OS can impact stock rates.
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