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.
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
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Need for Speed
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.
Simple Strategies
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.
