Binary Options Explained
What are binary options?
Binary options are financial instruments where profits are predetermined and known in the beginning. These are options in which trader has an opportunity to get fixed return in case if his prediction about different asset price movements in certain period are correct. This is also the main reason why they are called as fixed return options or they are also recognised as digital options. Binary options are getting very popular among online traders. I. e. in standard high/low binary option deal, trader has to decide whether the price of a particular asset will increase or decrease in selected period of time. The shortest period that is available in the market at the moment is 60 seconds. Trader can choose from 60 seconds to several days.
What can I trade with binary options?
You can choose to trade stocks, commodities, indices, currencies (Forex) or stock pairs. Youll see that binary option broker asset index differ so if you are interested in some specific asset that youre willing to trade, make sure that this asset is included in chosen broker asset index.
How much money can I make with binary options?
To make money with binary options you have to open an account with a broker and begin trading. Your success depends on your decisions. There are different types of binary options. If you decide to trade standard high/low type of trading, you can make around 65-85% profit per trade. However, there are also other types that you can choose to trade and some of them can provide you with a 1000% profit per trade if your trade expires in the money (learn the most important binary option terms before begin trading). Remember that higher profit opportunities comes along with a higher risk.
What types of binary options are there?
The most popular types of binary trading are: High/Low (also known as Call/Put, Up/Down), Range Options (also known as Boundary Options), 60 Seconds, One Touch, Double One Touch, No Touch, Double No Touch, Option Builder, BinaryMeta etc.
Where to trade binary options?
To begin trading binary options, youll need to open an account with a broker. You dont need to download anything or install a special software on your computer or mobile device. Binary options are traded online. All you need to do is find a broker with a platform that matches your requirements.
How much money do I need to begin trading binary options?
Most brokers will ask you to deposit at least minimum amount to their platform to begin trading process. On average it is around 200 – 250 USD. There are also few platforms where 100 USD is enough to begin. If you want, you can accept bonus and get more money for trading but then we strongly recommend you to read terms and conditions of particular broker bonus offer. Choose your binary options broker carefully and compare their offers.
Binary options explained / example
A trader reads the morning news and sees that the price of Google shares, currently trading at $601, is expected to rise during the day. A binary call option, expiring at midday, has a strike price of $610 with a 75 % return if the option expires “in-the-money” and 10 % pay back if it expires “out-of-the-money”. The trader decides to invest $500 in the call option. When expiration occurs at midday, Google shares are trading at $610.32, so the option expires “in-the-money” and the trader receives $875 representing the predetermined return on their $500 investment.
Do I need previous experience in trading to trade binary options?
No. There is no need for previous trading experience to understand and trade binary options . however it can be very useful to gain better results. If you are new to trading, you can learn some basic binary option strategies or create your own.