what is binary options trading
binary options

This is some new investment venture which anyone may easily use to gain from price movements of various indices, dynamic stocks, commodities and currency pairs. The main reason why binary options trading has quickly become so popular is because option traders have only one or two trading decisions to make when they’re placing a trade, that is, Yes or No. The dual option is what provides this kind of trade its name. It’s also the reason why binary trades are called Call or Put’ trades.

As a trader, you aren’t required to buy the actual asset; for instance, when you’re placing some trade based on the gold’s future value, you decide only if the price of gold is going to fall or rise in a specified time period, and you just place money on your prediction without having to purchase physical gold bullion.

Binary options trading provides you the unique opportunity of earning immediate gains depending on the kind of asset plus the flavor of binary trading option that you use.

Types of Binary Trade Options

Binary options trading, in its simplest form, is just a pure “call or Put” bet, also called a “High or Low” trade. But there are also other binary options favors, like the so-called “Touch or No Touch” options that may be used those traders who are more advanced to benefit from normal ranging and bending behavior of market prices of a wide range of traded assets. In these advanced methods of binary trading, the trader receives a competitive edge through reading and assessing indicators and charts prior to making some trading decisions.

What’s a Put Binary Option?

A Put binary option is put whenever you expect the price of the commodity or asset you select to bet on is going to be lower by the end of a particular trading period. When this occurs, and the price of the asset actually moves lower, you are going to win the trade and get as a profit a predefined payout.

What’s a Call Option?

When you choose placing a Call option, it’s in the hope that if the trading period comes to a close, the value or price of the asset you’ll have selected will have risen higher as compared to its initial price. When the price rises, then you get a profit which is predetermined at the start of the trading period. Basically, it makes the Call option to be the direct opposite of the Put option.

Example of a Call or Put Trade

In this simple example of a Call/Put or a High/Low trade, the amount you may possibly earn through making some correct prediction on the price of oil rising within an hour is 85 percent of your investment. When you wager $100 on your position (Call option), and the price does in deed rise as per your prediction, you are going to win $85 together with getting back your initial $ 1000. This totals to $185. On the other hand, when you lose and the option has a 10 percent out of the cash refund, you are going to receive $10 but you lose your initial investment.

Source of Image : ThebinaryOptionsBroker.com

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