What is Binary Options Trading
Binary options is a modern investment option which gives traders an option of predicting the market trend of a commodity. This involves determining whether a commodity’s price will increase or reduce within a specified time and if the prediction turns out to be true, then the trader is awarded the financial gains agreed upon by the institution or platform that gives the binary options services. This trading strategy has become so popular because people are looking for new trading mechanisms as the world’s economy begins to show signs of a dependable recovery. This business also allows investors to reap huge returns within a very short period of time through a mere purchase of commodities, currencies, indices and stocks. However, there are several strategies required for the success of this option and besides it requires a deeper understanding of the different types of binary options.
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Types of Binary Options Trading
There are three different types of binary options trading. For instance, high/low binary options trading is one of them. This is where investors are allowed to purchase an option and then predict whether it will run lower or higher than the agreed price over a given period of time. If the prediction is right, the investors are then paid their dues for correctly predicting the price of a commodity. The expiry time is relatively short because this trade is a means of fast cash. Some run for a few minutes but other platforms run an expiry time of one day or slightly higher.
In/out binary options trading is another type which differs slightly from high/low. In this strategy, investors are given a chance to determine whether a commodity will remain within a certain price range or whether it will beat that value by a higher or lower value. Investors who predict that the price will remain within the range will buy the ‘in’ option while those of a contrary opinion will buy the ‘out’ option. This type borrows greatly from information on Forex, therefore traders who have a good knowledge of this, stand a good chance reaping most benefits.
Touch/no touch binary options trading is a type trading where investors predict whether a commodity’s value will touch a certain price or not, within a specified time span. If an investors believes that the commodity’s value will touch that ‘strike’ value over the specified time span, then he or she purchases the touch option. If the estimation is right , they earn the profits but if it is not, this is considered a loss.
The simplest binary options trade should therefore have the following features:
1.) An underlying commodity/ asset
2.) The expiry date
3.) The direction of an asset’s value as either in/out, up/down or touch/no touch
4.) The value of expected rewards, should the prediction be correct.
There are multiple platforms that serve the customers with a comfortable trading ground. Most of the commodities traded include goods, stocks, assets, indices and currencies. Most dealers, also known as brokers own advanced tools which can guide novice or amateur traders in analyzing or studying the market trend before starting an investment. The tools are also used by experienced traders to increase their chances of gain. Most of them give the investors a correct prediction and hence they stand a high chance of gaining rather than losing.
Many people talk of the pitfalls involved in binary options trading, such as high chances of a total loss but they forget to mention the multiple merits which outweigh the pitfalls. For instance, this is a short-term trading option. This is very essential especially to new investors because you need to know the outcome of your investment so that you decide on the kind of adjustment that is required. This type of trade lasts for a maximum of one week but most of the time it takes a few minutes or hours. This is important because you quickly determine whether you have gained or lost in order for you to device a way forward, for example considering a change of strategy.
Similarly, binary options is different from the stock exchange market where you need to buy several shares for a start. This is a business for everyone, providing the right framework even to those who have small amounts of money. There are platforms which offer an option of investing from as low as $25.
This is a secure type of trading that does not depend on the market trend. It is a yes/no type of business which is immune to changes in the world market and economy unlike related businesses such as stock exchanges.
Ever heard of a business that will give you abnormal returns? Then try binary options trading. Most platforms assure its customers of nearly 75% returns which is no doubt the best deal. Some are totally unimaginable, for example in situations where a trader invests $200 and ends up with $1200 within a period of one day. A profit margin of 500% seems impossible but it has always been the case with binary options trade, especially to investors who are willing to take big risks.
Security is guaranteed because it is hell hard to get a binary options platform that is a scam. This is because of the huge starting capital involved because the service provider has to invest in several assets to meet the demands of clients. Besides, this business needs licensing hence it cannot be compared to the pyramid schemes which crumble in dubious circumstances and sink with all the money.
For those who fear that they will lose the whole amount that they have invested if their prediction is wrong, there is always a way out. There are several platforms that offer a certain percentage back to the investor, if he or she runs out of cash. The transactions are always simple, and the first step is to open an account with a dealer. There are several ways of depositing money to your count, which includes paypal, wire transfer and use of credit and debit cards. Withdrawal is equally simple, and the transactions take a short period of time with little charges too.
Conclusively, binary options is an excellent type of trading that represents a slight deviation from the usual hectic investments which require a lot of labor. Take an initiative today and reap the multiple benefits.