Binary option trading is predicting whether something will or will not happen to the price of an asset within a predefined time frame or at a predefined time. They are called binary options because there are only 2 possible results. You either win the maximum amount or lose the maximum amount. If your prediction is incorrect you will lose your investment. At a Euro is worth 1. For more terms please see our glossary of binary option terms.

There are 3 main varieties of binary options offered by brokers. Here they are in order of popularity. Lower payout rates are probably poor value markets to be avoided unless you have a trading strategy with a very high win rate.

One touch binary options allow you to predict whether the value of an asset will touch a certain price point at any time before the option expires. One touch options are usually offered on improbably high or low target prices relative to the price at the time you take the option. Boundary binary options allow you to predict if the value of an asset will remain within a certain price range or be outside that price range at the time the option it expires.

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Types of binary options There are 3 main varieties of binary options offered by brokers. One touch One touch binary options allow you to predict whether the value of an asset will touch a certain price point at any time before the option expires.

This is where their true power of binary options comes into the picture. Whenever you enter a binary options trade, you choose you risk and you also choose the time period of that risk. No more waiting endlessly for your trade to turn into profits and no more do you have the risk of losing the entire account balance. You have strict and full control over what happens to the trade and once the trade closes, you can forget about it and quickly move on to the next trade.

No fuss, no tension and no sleepless nights hoping for your trade to turn. And when you trade on the direct market feeds, as we do in our brokerage, binary options could really help in not only increasing your knowledge of trading and the market but also help you to stay in the market for longer. In this series, we will also explain how best to trade and use binary options to trade better and smarter. This article is part of the Forex Magnates Community project.

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Unlike stocks trading where you actually purchase and take possession of stocks, binary options do not require any such thing. Some analysts liken binary options trading to wagering on the outcome of a sports match.

Of course the more information you have about the playing conditions, the team members, overhead conditions and your opponents — the more likely you are to make a correct prediction. There is no certainty with binary options predictions; however you can reduce the likelihood of making a poor decision by using strategy, insight and your trading prowess for maximum effect. Consider the name binary options for a moment. Binary means 2, and with binary options you have 2 potential outcomes.

Your trade can either end in the money in which case you make a profit, or your trade can end out of the money in which case you make a loss. There is no middle ground. These are oftentimes known as all or nothing trades, or exotic options. Do not be dissuaded by the all or nothing approach to trading binary options. They are easy to work with and you can increase your winning chances by selecting tradable assets which you understand and enjoy trading. All you have to do is to forecast whether the price of that asset will increase or decrease.

Once you have made that prediction, and selected your preferred broker, you can easily verify the percentage return it will generate if your trade ends in the money. Likewise, you will know precisely how much you stand to lose if your trade ends out of the money.

Typically binary options losing trades limit your losses to the amount of money you have invested in the trade itself. Sometimes however you will even receive a percentage of your losing trade back.

In practical terms, the process is a lot simpler than all the theory. You simply register at your preferred binary options broker, make a deposit and then select the underlying asset that you wish to trade. Remember this can be a stock, currency pair, index or commodity. You then decide if you wish to place a call option the price will rise at expiry or a put option the price will fall at expiry. The amount you wish to trade will then be multiplied by the percentage return you will generate if you end in the money.

One click is all it takes to execute that particular trade. You can watch all of the price movements in real time on the binary options trading platform, or wait for the trades to expire and enjoy the profits you have generated. This is why these are such attractive tradable assets to so many traders around the world. You can ascertain from the beginning how much you can generate or how much you stand to lose, and only you are in charge of every aspect of your trading activity.

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Click here for information on Trading Systems. Popular in the Community. With binary options the two parties are the trader and the binary options brokerage firm. The traders are always at the risk of losing their entire account balance when they put in a trade. About BitEdge. Best crypto odds from.

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