What You Need to Know

What Exactly Are Binary Options?

Business Technology Abstract

Binary Options are an exciting way to trade by predicting the market price direction of currencies, stocks commodities and indices over a period of time selected by the trader. Binary Options are simple and can have only two possible outcomes: either the option expires in the money (your prediction was right) or out of the money (your prediction was wrong). The potential payout for each outcome is known when entering a trade, making Binary Options ideal for short term trading.

Trading Binary Options has many advantages, among them the option to close a trade before expiry, automatic sell of trades by Trade Control – giving the trader the ability to set the expiry time of the option – and a wide selection of visual trading tools.

Binary Option Trading Example

You open a 60 minutes trade of $1000 on the EUR/USD predicting the price will go up. The return on this option was 80%. If the option expires In the Money, your prediction is correct. If the option expires Out of the Money, your prediction was wrong and there is no return.

  • If the EUR/USD went up, meaning the price of EUR/USD in expiry is higher than the price when you opened the trade, your option has expired “In the Money” and your payout is $1800. Your investment is $1000 and $800 is your profit (80%*1,000).
  • If the EUR/USD went down, your option will expire “Out of the Money” and you will not receive a payout.
  • Important – For many options, the Stockpair platform enables the closure of the position before expiry.

What are Binary Option’s Benefits for Traders

Trading in Binary Options offers significant benefits to the trader, including controlled risk with trend profit and no commissions or hidden costs.

  • Controlled Risk – payout is known when entering a trade, no margin calls or leverage.
  • Intuitive and simple – appeal for every trader.
  • Profit Profile – small movement can bring high returns, unlike traditional trading.
  • Choice – variety of markets, currencies, commodities.
  • Trading Style – from short term to long term, the trader define the period.

See the original article here.

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