Binary Options Introduction
1) What Are Binary Options? Binary Options Introduction
Binary Options are estimates of underlying assets performance during a given time frame.
To understand this more comprehensively and to be successful, one needs to understand how the market works. Markets tend to move in patterns, understanding these patterns is a fundamental part of the game.
Binary Options stem traditionally stem from Forex industry . The one big advantage of Binary Options is that the risk and reward is very clear at the outset.
In options we trade futures on the market and not in the market like other trading methods, and thus the amount of psychological stress isn’t expressed, as you are just predicting the asset’s movement for a predetermine time frame.
2) The Definition of Binary Options
Binary Options Introduction/Definition – The word binary stands for “having two parts”. Generally speaking, all you need to do is predict either “Call” or “Put“. Binary Option trading has only two investment possibilities for you to predict and then choose between.
One investment possibility is expressed when you predict that the price of the asset will rise, this type of investment is named “Call” option. The other possibility is presented when you predict that the price of the asset will fall, this type of investment is named “Put” option.
Choosing an asset is the first step of your investment. For instance, if you have an interest in gold prices, you may choose to place a binary investment in gold.
When a trader is said to have correctly predicted the direction of an asset within a specified , this is considered to be ‘IN THE MONEY.’ The trader will be receive his or her initial investment plus a set return defined on the outset (usually around 70% with most platforms)
When a trader does not predict correct the direction to the contrary, this is generally considered to be ‘OUT OF THE MONEY’. The trader in this will loose his or her initial investment initiated for that particular trade.
Obviously, the more familiar you’re with the a particular market like gold the better your chances are of successfully predicting the fluctuations of gold prices.
3) What assets can be traded as Binary Options?
You can either trade with:
- Indices – Such as Nasdaq, Dow Jones, FTSE, Nikkei and many more
- Forex – Combinations for all the major currencies such as USD, EUR, GBP ,JPY and AUD just to name a few
- Commodities – Gold, Silver, Oil, Corn, Coffee and several more
- Stocks – Over 50 of the biggest and most interesting companies in the world from a variety of industries are available in the asset list, amongst them – Google, Facebook, Coca Cola and many many more.