Binary options trading requires you to predict the direction of price movement. If your prediction turned out to be correct at the time of the expiration of a certain period, you will receive a fixed win. If your prediction turns out to be wrong, then you will lose all your investments. Binary options are one of the simplest trading options, because as a trader you know for sure that you have every chance of both winning and losing.
A binary option (digital option, all-or-nothing option, or fixed-profit option) is an option that, depending on the fulfillment of a specified condition at a specified time, either provides a fixed amount of income (premium) or does not bring anything. Since the option is bought in advance at a fixed price, the total is either positive (in the amount of the difference between the premium and the option price) or negative (by the value of the option). As a rule, the size (module) of a positive result is smaller than a negative one.
How to trade binary options?
Binary options is a mass-market financial instrument because it allows traders to take a flexible approach without having to deal with the intricacies of traditional options trading. Binary options can be used to hedge your portfolio or for short-term speculation. These options give you the opportunity to enjoy high payouts in a short period of time, and it is because of this that this type of trading is becoming increasingly popular all over the world. Binary options trades are available on several underlying assets, including commodities, stocks, indices, and currencies.
To start trading binary options, you need to choose a “put” or “call” option. A “put” means that you predict a decrease in the price of the underlying asset compared to the current price at the time of expiration, and a “call” means that you predict an increase in price. If your prediction turned out to be correct, you will make a financial profit, but in case of an incorrect forecast, you will be left without money. Sometimes, at the end of the trade, some funds will remain in your account, which means that at the time of completion of the trade and at the time when you opened the trade, the price of the underlying asset was the same. In such a case, you usually get your initial investment back.
Traditional Options vs Binary Options
Due to the fact that the winnings are based on the price of the underlying asset, at the end of time, binary options are very similar to traditional ones. However, traders only need to correctly predict the direction of price movement, and not the size of these changes, as during binary options trading. The main difference between binary options and traditional options is profit and financial loss.
Binary options offer a fixed amount of profit and loss of your initial investment. With traditional options, profits can be unlimited, which makes trading a riskier business.
- How to make money on binary options – step-by-step instructions and options trading strategies
Benefits of Binary Options Trading
Here are some of the benefits of binary options:
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•Simplicity. You just need to decide whether the asset will end above or below the initial price.
• Binary options are simple and easy to understand.
• There are risk limits and fixed payouts.
• Binary options offer an easy way to hedge your portfolio.
• You can generate profits from binary options trading even if the price of the underlying asset has changed by one pip.
• Binary options can be a very effective tool for hedging any current position.
• Binary options are issued 24 hours a day, 7 days a week, which allows investors to choose different terms for trading. Binary options are available on many global underlying assets.[/list]
Where do I trade binary options?
To trade binary options, a trader needs a broker. To choose the right broker, and not get scammed, you need to choose a broker with the best reviews.
A broker is a legal entity or individual who performs intermediary functions between the seller and the buyer, between the insurer and the insured (insurance broker), between the shipowner and the charterer. The broker receives remuneration in the form of commissions.
How much money do you need to start trading
An initial deposit is required to start trading binary options. It can be from $ 10 to several thousand. On average, traders make a deposit of $ 250 so as not to risk much.
You can choose a broker and check the minimum deposit in the brokers’ ranking.
Tagged with: Binary Options Academy
