What are Binary Options?

What exactly is Binary Options Trading?

what is binary optionsAs the name binary says it all, binary options trading include the speculation over only two possible outcomes. Either the underlying asset will go up or down within the set expiry time. Two terms that traders use the most are in-the-money and out-of-the money trades. They simply mean winning and losing trades respectively. The main aspect to consider when executing a trade is the directional movement of the asset within a specific time-frame, known as the expiry time. In practice, the trader opens a trade by choosing either the Call or Put option and sets the expiry time which can range from as short as 30 to 300 seconds to up to hours or even days. Upon the expiration, the trader will receive profits of up to 85% for any trade that has ended in-the-money. Binary options trading has various advantages attached and anyone with an internet connection can get access and trade online. Anyone who wishes to engage themselves in this particular activity should start by learning the basic techniques and then move to other trading strategies as they gain more experience.

Understanding Binary Options Trading Instruments

In the world of binary options and forex, trading instruments are among the most important things that any trader will need to take into consideration. Also known as the underlying assets, they are divided into 4 main categories or asset classes.

Most popular asset: Currency Pairs

Befbinary options trading exampleore engaging into any trading activity, the things that traders need to know are the different asset classes available, and its importance in the global market. The most popular asset is currency pair, which simply is the ratio between two different currencies. For example, the EUR/USD; the one on the left is the base currency and the other one known as the counter currency. When dealing with currency pairs on the binary options platform, the trader does not have to buy or sell the base currency and set profit according to its movement relative to the counter currency. Instead, binary options trading only require traders to speculate over the movement. For example, if you believe that the EUR/USD pair will eventually go higher within the next hour, you will mostly like to execute a call option. At the end of the expiry time, if the desired outcome has been met, the trader has an in-the-money or wining trade.  

Trading indices and stocks on binary options

Apart from currency pairs, traders also opt for stocks, indices and commodities. A stock index has a value according to the various groups it represents. An index has a weighted average depending on the prices of its various components. Thus, an index is regarded as an asset in its own and undergoes all market conditions attached to it. For example, the Dow Jones Industrial Average Index includes big corporations such as AT&T, Verizon and Merc among others. The US S&P 500 index is based on the top 500 tradable American stocks and acts as a reliable indicator of the economic situation in the US. Leading stocks that are available for trading purposes on the binary options arena are mostly those that include company shares usually listed on traditional exchanges. Anyone trading on a binary options platform can find famous companies’ stocks such as Google, Microsoft and Apple among others. Commodities form part of another trading instrument, where traders can choose assets such as gold, silver, wheat and oil among others. The latter have economic value attached to them and can be traded on traditional exchanges as well as on binary options trading platforms. Usually, those assets are used by experienced traders. With the wide range of assets available on the BigOption trading platform, traders will eventually want to get themselves comfortable with each asset class. It is recommended that they learn and practice with the most popular one and move to other asset classes only when they feel that their technique has improved.

BigOption: A Profitable Investment

Trading can be very profitable and at the same time an exciting activity and anyone, with a minimum amount of knowledge, can enter this lucrative investment arena. Making profits out of binary options trading is realistic and can be accomplished in a very easy manner. Moreover, it doesn’t require any additional software or third-party programs to trade on binary options platforms. For example, BigOption offers traders a user-friendly trading platform with international security protocols without the need for any additional software. Traders only have to open an account and all trading activities can be executed on the platform itself. Considering the speculation part of binary options trading, one can easily believe that all is left to luck and randomness and this would be the first mistake as binary options trading doesn’t work on a randomness basis like gambling. Traders need to be well informed about the financial world before engaging into any trading activity. Only someone with sufficient knowledge can make sound trading decisions and ultimately succeed at generating high profits.
Priscilla Camryn By: Priscilla Camryn