Binary options, first and foremost, are a kind of gamble. Here, you place the bets on whether or not the price of a particular commodity would reach up to or lower down at a particular level. If you guess that it’ll come down, then you sell it, and if you guess that it’ll rise, then you buy it. So there are basically two types of trades as far as binary options go, “cash or nothing”, and “assets or nothing”. In the first type of trading, you get handed cash, and in the second case, you are awarded the value of the underlying assets. The amount of risk in binary trading, as one could imagine, is far higher in comparison to other types of trade. But in proportion to this risk, the amount of returns you earn from here (should your trade click) would by far outdo anything you would ever get from other kinds of trade, especially foreign exchange. Binary trading is risky, so you would really have to learn how to trade binary options.
Earlier, there were only a few choices when it came to binary options trading, and you could choose from only either of a pair from the three main types of binary trade: It would either have to be Call/Put or High/Low or Up/Down. However, this has undergone a sea change. Now, the field has expanded and there are a total of seven pair options that you can trade while going for ‘binary’ options. These are as follows: (Points taken from http://www.binaryoptionstrategy.eu/binary-options/)
High/Low: This is the most basic kind of binary options. Here, you choose an asset (such as commodity, stocks, shares, currency etc.) and speculate on whether the prices are likely to increase or decrease. If they are likely to increase, then the trader decides to buy; and if not, then they decide to sell. And accordingly, you check the ‘high’ and ‘low’ options respectively. The expiry period for such trades usually varies from place to place, but most of the time it is between five to fifteen minutes.
One Touch/No Touch: This pair is slightly different from High/Low trading. When you’re dealing with one touch trading, then you’re viewing a given asset and speculating whether or not an asset will reach a particular point within a definite expiry deadline. The point to be reached in this case is known as the “trigger” point. The further the trigger point is from the present level of price, the greater is the level of the payment that you earn upon succeeding in a trade. There is a marked risk division here. If the trigger point is located within easy reach of the current levels, then the risk level is lower and the payout is not that impressive. Needless to say, if it’s the reverse then the opposite will be true (i.e. if it is located far off then the risk is greater and hence one would derive good payouts).
Boundary/Range: Boundary trades mainly involve trading in channels. When you trade in the boundary range, you will learn the concept of a price range channel. The upper and lower limits are determined by resistance and support. Boundary trades are chiefly known as range trades. In these trades, prices will stay within a particular range which falls between two trigger points. Trading in the binary of boundary and range means that you’re essentially doing double “no touch” trades.
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Armstrong Louis Joined: August 9th, 2016 Articles Posted: 78
