What are Binary Options?
The dictionary meaning of the words
‘Binary‘ is two, ‘Option‘ is choice.
Binary Options: Two very simple choices.
‘Binary options’ may sound a bit intimidating to any newbie, but the truth is that the meanings are highly simplistic.
Binary: when only two kinds of decisions are possible. If, after a certain set of time, you succeed in forecasting the increase or decline in the targeted economic value, you are rewarded with an immediate gain. A quick, easy earning.
What are Binary Options? Binary Options is a financial instrument that allows everyone to invest in order to share in the straight, small risk, gains.
Profit and loss are shown in advance, and payment of funds earned happens in case the direction of market meets the predicted expectation.
How To Trade with Binary Options?
The choices presented in the Binary Options world boils down to CALL and PUT (Or High/Low, Up/Down etc.).
Choosing an “asset”, let’s say for example, the pair Eur/Usd, you’d be determining whether or not the euro will gain in value against the dollar, right up until the targeted time limit you selected.
In this example, the euro is worth 1.13926 dollars. Two choices are possible: High or Low. Should the euro rise or fall in value against the dollar at the expiration time, is entirely up to your judgement. Gains if your forecast is correct, about 70-80% of the amount risked, or total losses if not so.
Anyone who is interested in the “Binary Options” does so with the obvious aim of earning money. We are in the financial sector who must always be keenly aware of the risk that exists working in these markets. Even large institutions at times can often mistake predictions. A very treacherous career when jumped in blindly.
In the game of Binary Options you are not necessarily required to be a financial expert. The choice will always be “binary”. You either win or lose, as simple as a “roulette wheel” betting between red and black. In which case the chances of success is technically a casual 50-50%. But all you really need to gain profits is a steady 55% and up.
The key difference in Binary Options would be the fact that the mechanism of its “roulette” is not entirely unpredictable. The financial sector pours itself to a multitude of researches and studies, indicators and tools developed by its own experts throughout the course of its profession. Anything that would help them forecast the market’s path, heightening the success rate to any Trader.
Here is the US dollar
and here is the Euro
The value of the Euro against the Dollar is in constant motion… The Eur/Usd asset’s rate always changing.
If the trader predicts that the price of the asset (Eur/Usd in this case) will go down, any other trader could just as well bet in the opposite direction.
Let’s say both these traders each stake 10$.
And let’s say the price goes up.
The “Call trader” will win up to 85% of what he pledged
Just as well, the “Put trader” loses everything. Or in some cases the broker might provide him a small return, with something at around 15%