What are binary options?

Trading binary options is for many people a new type of trading that require you only to predict the direction of the price movement. If your prediction is correct at the time of expiry, you will receive a fixed payoff. Usually the fixed payoff is between 75%-85%. If your prediction is incorrect then you will lose your initial investment and will not receive any payoff. That’s how simple it is and that why binary options trading has become very popular among both beginners and more experienced traders.

Binary options are without any doubts the simplest way of trading that are available because as a trader you know exactly what you stand to gain, and what you stand to lose. You can never lose more than you have invested – and you know exactly the payoff if your prediction is right. This is not the case with forex trading for example where losses can be very difficult to predict.

How Do I Trade Binary Options?

When trading binary options, you will need to place a put or call option. Easily explained a put option means that you predict the price of an underlying asset will decrease from the current price at the time of expiry while a call option means you predict the price will increase. If your prediction is right, you will finish in the money and make a profit, usually of between 75%-85% of your initial investment. You will finish out of the money if your prediction is incorrect. Sometimes your trade will finish at the money which means the price of the underlying asset is the same as the time of expiry and at the time you opened the trade. If this happens you will usually be given your initial investment back.

Advantages of Trading Binary Options

  • Simplicity – you just need to decide if the asset will close below or above the initial price
  • Binary options are straightforward and easy to understand
  • There is a limited amount of risk and a fixed payout
  • Binary options offer a simple way to hedge your portfolio
  • You can generate a profit from a binary options trade even if the price of the underlying asset changed by a single pip
  • Binary options can be a very effective tool to hedge any current positions
  • Binary options are issued 24 hours a day, 7 days a week which allows investors to trade on a variety of different time frames. Binary options are available on many global underlying assets from many different exchanges

Start trading binary options today!

Please be aware of the risks associated with trading the financial markets and never invest more money than you can afford to lose. The risks involved in trading binary options are high and are not suitable for all investors.