What Are Binary Options, Their Advantages and Some Trading Examples?
Binary options are a simple and useful financial trading product. They provide a fixed return for each transaction, which is done based on whether there was a trade “In Money,” “Out of Money” or “Tie.” Binary options (also known as digital options or BO for brevity) are usually one of the fastest growing financial trading products in the world, because of their comfort, using the certain certainty that they provide on each transaction, makes them attractive as a trading tool for many investors.
Trading Digital Options
Digital options can be purchased on almost any financial product, and they can be purchased in the direction of trade, by purchasing the option “Call” / “Up” or “Put” / “Down.” This means that the investor is long or short for any financial item, simply by buying a binary option. They are offered against a fixed expiration period, which can be felt, for example, 5-30 hours in the future, an hour or so ahead or at the end of every trading evening. After acquiring digital options, they can not be resold before the expiration date.
Trading digital options are very popular among traders, given that they are very simple and can yield high profits in a short time. Unlike classical trading, where each point has certain advantages that are proportional to the sold level, in binary options you only need to predict the correct movement for the selected period. If you know what the market is likely to choose in the next 30 minutes, you will buy a call option, and you will receive a 75% return on your investment. It does not matter whether the market moves only by 10 units or by 70 units, the profit is the same. Perhaps, that is why they bring the greatest profit from all types of trade.
Some positives about binary options
A positive aspect of trading binary options is the fact that you can create very strong strategies and methods of money management because of its binary nature. You can make very accurate calculations of your income by the number of transactions and the winning ratio. You can stick to certain values ??and get a stable profit.
Because of how they work, you theoretically need a 50 percent chance to predict the right result, regardless of whether you conduct any analysis. A simple, uneducated guess will still have a 50% chance of winning (buying options without any information otherwise would be known as binary games). Now imagine how much money you can make if, for example, research takes your winning percentage to 70%!
Binary Options Advantages
· Simplicity is the best advantage of binary options. The competition is whether the asset closes above or below the trading price. This is very simple, and the only consideration is the direction of the price of the asset.
· There is a limited risk, and the payment is predetermined or determined during trading. Potential risks and rewards are known from the very beginning of the trade. With traditional trade in goods and assets, there are no clear parameters. Losses or profits are risky and highly speculative.
· You can simplify the practice of portfolio hedging. Regardless of which binary option is closed, the option is paid at the full rate. This is true, even if the closing price is minimal.
· You can trade on several time frames in the options market. Binaries are located on different world markets from different exchanges, and you can trade online on a 24-hour basis.
Example of binary options trading
Binary trading is speculative, depending on the price of the stock or commodity. Using Google as an example, the price today is $ 801.25 per share. You are thinking about price movement with a certain period; often only one hour. If you think that the price of Google shares will be higher than this current price level, buy the binary call option. If the price closes above the specified price on closing, you are “in the money,” and pay out the money promised during the trade. If it falls, you are “out of money.”
Watch the traffic for the last few months and weeks of Google or any other stocks or products that you are considering. Reasonable investors and traders are keenly aware of how prices are going; they do not just “guess,” but use information and traditions to determine if a binary option will be paid. Bidding also watches the rapid movement of the desired product. Binary options quickly move, and the knowledge base about the stock, product or currency should be fast and accurate. Simplicity and rapid deployment of money and information is the beauty of binary options.