What is Binary Options ?

Binary Options, also called “fixed return options” (FROs) or “digital options” are relatively new on the financial market, but nevertheless very popular among novice and expert traders. Binary option is a type of option in which the payout and potential risks of the investor are determined before the purchase of the contract, which makes binary options trading one of the most risk-controlled types of online trading.

Talking generally Binary Options trading is nothing more than a prognosis (or call it prediction) of the price direction of the underlying asset – up or down. That simple… Binary options trader is being asked 3 things while trading:

1) To choose an underlying asset (currency pair, stock, index or commodity)

 

2) To choose price direction: up or down

3) To choose by which time it will happen (end of the hour, day, week or month).

That’s all that needed to make a trade and start making instant income!

If the trader’s prognosis is correct and option expires in-the money than trader receives fixed payout no matter how dramatic the change of the asset price was. Even 1 pip change can bring you up to 85% payout. Most of the binary options trading platforms offer up to 15% return if the option expires out-of-the-money.

It is essential to remember that while trading binary options you don’t buy or sell anything on the market, you just predict the direction in which the asset price will go in a specific time frame.

 

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3 Comments + Add Comment

  • A very helpful site. Looking forward to learning about binary options.I hope to see more!

  • Good post. I definitely love this site. Keep writing!

    • Thanks! I will definitely write as Binary options is a really fascinating topic! =)

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