What is Binary Options?

automated binary options

Lets learn a bit about binary options, what is it, and how it works?

Over the last couple of years more and more people have been trading Binary Options, and has been discovered as an efficient way to invest and profit in the internet. Binary options is one of the latest financial instrument to arise in the market and we will elaborate why. If you are fascinated by the changes in the market and find yourself constantly reading economical articles then Binary Options is the right way to take advantage of your knowledge.

How does it work?

Binary trading has a fixed payout that you will either receive or not, and it is simple as predicting if the price goes up or down. You have different types of assets which you can choose from to invest in, such as;

Commodities; Gold, Silver, Oil, Wheat
Indices; Dow Jones, NASDAQ, S&P 500
Stocks; Google, Facebook
Foreign exchange; USD, EUR, GBP

Binary options allows us to place predictions on changes in the price of various assets by using a pricing platform, e.g. Spot Options, (which we will be talking about more to come) and it is so simple and user-friendly.

So how simple is it?

There are only two outcomes, the price either goes up or down. If your prediction is correct, you’ll receive a payout that is fixed before you buy your option. If your prediction is wrong, you will lose your investment. It’s that simple!

Binary options can be bought on virtually any financial product and can be bought in both directions of trade either by buying a “Call”/“Up” option or a “Put”/“Down” option (we will be learning more about the terms and lingo later). This means that an investor can go long or short on any financial product simply by buying a binary option. Binary options are offered against a fixed expiry time which may be 60 seconds and up to 30 minutes, an hour ahead or to the close of the trading day.

Knowledge is Power

Although it is very simple to start trading, just like anything in life there are risks. You don't have to be an expert in order to trade, but you do need to follow up with the daily market and acquaint yourself to the market behavior. The simplicity of trading Binary Options is alluring, but that can actually entice traders to begin trading binary options when they are not ready or educated enough to begin. So it is very important to keep in mind that as easy as it may seem you will need to use different strategies and techniques.

What is the difference between Binary Options and Forex Exchange?

As we mentioned, Binary Options is very simple to trade with and the platforms are uncomplicated, Forex on the other hand requires a bit more professional experience. Binary Options expires in a short period of time, it could range from a minute to a week when you already know how much you can gain or lose, because it is a fixed predetermined cost. With Forex its different, you will need to wait for the position to hit a certain level before exiting which can take more than a week, it also requires careful monitoring in order to manage the risk in an effective and efficient manner. Knowing the maximum potential profit and maximum potential loss of the trade in advance is a very strong advantage for Binary Options, and with Forex you risk losing all your money that you invested when making a wrong decision.

So I would say Binary Options is probably the best way to start trading and just getting an idea of how the financial world works. There is a reason for it being so popular these days, the platforms make it very easy to trade and the basics can be learnt very quickly. That said, it still does require some professional help if you want to keep your profits high enough and even make it your secondary income. And that is where we step in, to make things a bit easier than it already is, and to explain some things that are not necessarily explained in the Binary systems.

 

 

 

 

 

 

 

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