Binary Options Trading Definition For Beginners By ForexSQ
Binary options trading is a Forex or Stocks option in which the payoff is either some fixed monetary amount or nothing at all. This article is about introduction to trading binary options so let’s now briefly understand about binary options trading and how to do it the right way.
Binary option trading can begin with $100 by the best binary options brokers list at ForexSQ
Binary Options Trading Introduction
Although binary options trading is a growing form of investment, it remains a relatively unknown product. Over time, this is likely to change, as binary options represent a very simple investment, where risk and reward is very clear at the outset.
A binary trade is a simple 'yes or no' proposition. For example, will a particular stock price rise in value? Or will an exchange rate finish lower? The up/down or yes/no outcome defines the 'binary' element. The only question beyond that is over what time scale the binary option is set for. It might be as short as a few seconds, it might be a month – or anywhere in between.
So binary options offer a simple trading mechanism, but they are also high risk / high reward. If the investor is correct, they will see a return on their investment of somewhere between 70% and 95%, paid immediately after the option period has settled – perhaps within just a few minutes. If the market moves against them, they lose their full investment. There is however, no leveraged exposure with a binary trade, so the risk and reward ratio is also simple to manage.
The simplicity gives binary options trading it's strength. It is a tool that can be used to hedge other investments, or can be operated as an investment vehicle in it's own right. There are a wealth of binary options trading strategies, and each caters for a specific investment need.
Binary options trading can be used in a range of different ways, and across a huge array of different commodities and markets. This means identifying the best binary options trading broker, or the best binary options trading account, really depends on the needs of the individual investor.
For example, some binary brokers may specialise in forex (foreign exchange) binaries. Others may promote commodities options and only offer a handful of forex markets. Likewise, the returns may differ between asset classes, and with these varying by as much as 25%, it is easy to understand why this might be important when selecting a binary options account.
Investment restrictions may also point particular investor either to, or away from, certain binary trading accounts. Some brokers offer minimum trades of just £1, while others cater for investors willing to invest £200,000 in a single binary option. Again, when judging which binary trading platform is best, an investor will need to consider their own trading requirements before deciding to open an account.
Some of the difficulty in making such a decision has been removed by the brokers who offer binary options demo trading accounts. These allow investors to try the services on offer, see if the range of markets and investment scales suit them and only proceed to a funded account when they are fully satisfied that the right trading account has been identified
- Report infographic