You might have heard or come across several links or websites relating to binary options trading. Most of the time, you’ll see the words “binary options” side by side with “high yield return” or “all-or-nothing options”. But for someone not familiar with the field, these phrases could be very confusing. So let us introduce you to the spectacular world of binary options trading and its promising advantages.
What are binary options?
Basically, binary options trading is a new type of investment. In this type of trading, you have to predict on which direction an underlying asset would move. When you decide to speculate the direction of an asset’s movement, a contract is made between you and the online broker. This contract allows you to buy an underlying asset at a fixed price within a given period of time.
Binary options are also called all-or-nothing options, Fixed Return Options (FRO), or simply digital options. All of these labels indicate the “binary” nature of these options. With its 0-1 characteristic, you can conclude that there are two possible results you can get from a binary option.
It’s a must that each investor is aware of the binary nature of this industry before purchasing an option. To illustrate it better, let’s say that you buy a Google binary option for $/€/£200. Then, you assume that after one hour, Google’s shares will be higher than its current price value. If you get it right, then the broker can offer you a designated return percentage on your investment.
Types of binary options
There are various types of binary options you can trade. You can choose among the three major types, namely the Above/Below or High/Low, One Touch, and Range/Boundary options. Each of these types offer varying advantages. However, the goal remains the same – to make accurate predictions of the assets’ movements before it reaches the expiration time.
These types of binary options are the standard ones. There are also more innovative such as the Options Builder and the 60 Seconds trading. Although these are the modern trade types, some traders still prefer to go for the standard Above/Below binary option, which happened to be very popular among users.
When trading options, the most crucial and most important factor to remember is the assets you’re trading. It’s best if you choose an asset that you’re familiar with, but if you’re a new trader and has no experience in trading yet, better study the market first before deciding on which asset to trade.
Each binary options broker offers you an array of assets you can trade. These are the Forex or Currency pairs, Commodities, Stocks, and Indices. Moreover, each of these assets have their own trading hours and expiry rates rules.
To accurately predict an asset’s movement, you can learn about interpreting market trends and research the latest news updates regarding the assets you want to trade.
Binary options brokers
Like our opinions, binary options brokers are diverse. Each one is different from another, and offers distinctive features and trading functions. Take note that your chosen binary options broker is the one which will enable you to trade options and guide you on your trading success. So be wise and cautious when selecting your broker.