Binary options are typically short-term, high-return investments. The word ‘binary’ indicates that there is either one of two options. The the word ‘option’ is an investment made on the movement of an investment. A binary option can also be known as a trading instrument with a fixed return that is determined at the outset of the trade. In essence, Binary options involve making predictions on an investment. If a prediction is made correctly, the person trading will receive a refund of the stake as well as a return on investment that is approximately 72-88%.
All markets such as currencies, stocks and commodities such as gold can be traded as a binary option. Binary options do not have fixed prices, as the trader will choose the amount of money he wants to risk, and invest that amount in the option that he wants to buy. The development of technology has aided digital trading and thus allowing the investor to make more lucrative trades.
Binary options trade is based on the asset that the trader wishes to select. Seeing as though the trader does not physically purchase the asset, the asset itself does not belong to the trader. Each binary option is a contract, which has a set expiration time. Therefore the purpose of the binary option trader is to predict the movement of the asset, within a limited time-frame.
Binary options offer a wide range of benefits to all traders regardless the amount of time they have been trading for. The simplistic nature of binary options trading is one of the most appealing factors compared with their traditional counter-parts. Every situation is either a gain or a loss. In traditional trading, the trader only makes money if the markets and prices of shares increase. However, with binary options trading, making a prediction about the fall in value of an asset can also be profitable. Trading on the foreign exchange is also possible as traders can forecast the rise or fall of one currency against another.
In summary, binary options trading involves, making a successful trade, choosing the asset, predicting the movement and waiting for the option to expire.
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