A GUIDE TO BINARY OPTIONS TRADING

Posted by tradesolid on September 23rd, 2016

A binary option is a trading method based on a financial choice in which the final outcome is either some fixed money or nothing at all. Although binary options are regulated well but internet trading leads to fraudulent cases too. These options are a convenient way to trade price fluctuations in number of global markets, but an exchanger needs to understand the pros and cons of these often-misunderstood instruments. Binary options are different from our traditional trading options. If traded, one will find these options have dissimilar outcomes, fees and risks,

EXAMPLES of BINARY OPTIONS

Binary options are classified as attractive options, yet trade involved is extremely simple to use and understand functionally. The mostly used binary option is a "high-low" option. It provides access to stocks, indices, commodities and foreign money, a high-low binary option is also called an option in which the returning amount is always fixed. This is because the option has an expiry. If a trader gambles correctly on the market's direction and the amount at the time of expiry is on the correct side of the strike price, the trader is paid a fixed amount of money regardless of how much the instrument moved. A trader who gambles incorrectly on the market's direction loses the invested amount of money.

DYNAMICS OF BINARY OPTIONS

If a trader believes the market is increasing rapidly, he would buy. If the trader sees that the market is falling, she/he would buy a "put." For a purchase to be made, the price must be above the strike price at the expiry time. For a put to make money, the price must be below the strike price at the expiry time. Binary options throughout the world typically have a fixed final outcome and risk, and are offered by individual brokers, not on any exchange. These brokers make the money from the percentage difference between what they pay out on winning trades and what they collect from losing the trades.

While there are exceptions, these binary options are meant to be held until expiry in an "all or nothing" final outcome. These binary options can be traded at any time at a rate based on market forces. The rate changes between one and hundred based on the possibility of an option finishing in or out of the money. At all times there is full honesty, so a trader can leave with the profit or loss they see on their screen in each moment. They can also enter at any time as the rate moves up and down, thus being able to make trades based on various risk-to-reward scenarios. The maximum gain and loss is still known if the trader decides to hold until the date of expiry. Since these options trade through an exchange, each trade needs a willing buyer and seller. The exchanges collect money from an exchange fee - to match the need of buyers and sellers - and not from a binary options trade loser.

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