Trading binary options is highly straightforward, and an ideal way to capitalize on fluctuations on the global market. The most well-known type of binary options is ‘high-low’. This involves the prediction of whether an asset’s price is likely to rise or fall within a predetermined time frame. If a trader believes that the price of the asset is likely to rise, they choose the “call” option, whereas if they think the price may fall they select “put”.
There are only two possible outcomes with binary options, also known as Digital or Fixed Rate Options (FROs). The payout is fixed at the time of beginning of the trade. With binary options the trader knows in advance, and can control, the exact level of risk involved. The difficult complications involved in other methods of market speculation are removed, such as with traditional trading you must constantly monitor the asset to decide when to sell, the value of your shares can decrease rapidly, you have to worry about complicated stop loss orders and you can lose far more than your stakes. With binary options the moment you place your trade, you know exactly how much you stand to gain or lose so that your risk is specifically limited. The trader is given the option to select the risk percentages for every trade with a potential 85% return on an in-the-money outcome.
If the trader has wagers correctly and the asset’s price is on the correct side of the strike price by the time of expiration, the trade is profitable and the trader receives a fixed payout amount. However, if the trader has made an incorrect prediction, they lose their investment sum.
What Are Binary Options?
Making a trade is extremely easy and straightforward and it's done is three easy steps:
Select an asset to trade - tradable assets include stocks (e.g. Facebook, Twitter, Google, McDonalds), commodities (oil, gold, wheat, silver), currencies (EUR, USD, JPY, GBP) and indices (DOW, IBEX, CAC 40, BOMBAY).
Select “High” if you think that the price will be above the current level at the expiry time.
Select “Low” if you think that the price will be below the current level at the expiry time.
Choose the amount you want to trade – then click INVEST.