Binary options or digital options are investment products, which enjoy great popularity particularly in England and the United States. Similar to CFD they were originally only used by institutional investors and are now also available to private investors. The big advantage of binary options is in their simplicity. Like the name implies, there are only 2 possibilities for investors after the option is taken. Whether the investor makes a profit or he loses.
Binary Options Trading Example
The DAX30 stands at 10:00 AM at 6000 points. Think that the index will be higher than 6000 points record at 10:15 AM and you buy a call option on the DAX30 for 100 Euro with a potential payout of 89%. At 10:00 AM is the DAX30 at 6001 points. Your trade was successful and you get paid by the broker: 189 Euro. The DAX30 recorded would have around 10:15 under 6000 points, would get 15% of their use, so 15 euros from their broker and realized a loss of 85 euro.
As you can see, you must predict only binary options, whether an index, a stock, commodity, or a currency in a certain time frame will record a rise or a fall. If you are correct with the assessment after the expiry of the time frame, you get paid out a predetermined percentage of their use (usually between 65% and 89%) as profit. Should not really be with their assessment, you will receive a refund of the platform usage. Usually 10% to 15% of this repayment.
The biggest advantages of binary options are:
- Binary options are easy to be
- Low minimum deposit
- Risk is confined to the capital employed for the option
- Big profits even with minimal market movements possible
- Compared to the normal option trading less know-how required
Binary options tradable markets
There can be binary options (depending on the broker) on almost all products such as indexes, commodities, currencies or stocks.The time frame to expire the binary options range from 60 seconds up to a month or longer.
Types of binary options
- Call options: to call the dealer that that the underlying market rises after the purchase of the option speculated options.
- Put options: with put, the traders on the underlying market to purchase the speculated option’s rate will probably go down.
In addition, traders have often got more options in the binary options trading platform software.
More opportunities when trading binary options for profit
Touch trading is a new way to trade binary options. In the touch trading, the trader must predict whether the traded product (equity, index, commodity or currency pair) in a previously defined timeframe affects a certain price or not. It is no matter whether the price will be achieved at the beginning, in the middle or just before the end of the time frame. As soon as the price once touched the previously defined price is the profit and the trader will receive between 65% and 89% winning his wager. Profits in the One Touch tool can go up to a stunning 650% on for example the NASDAQ with binary options broker GOptions.
You have bought a touch option in the DAX30 which currently quoted at 6000 points. Her touch is 6020 points and the price rises shortly after the purchase, the touch option DAX30 touches 6025 points and then falls back to 6000 points. Because of course your touch level was touched you are in the money and get a profit of 89% to 650% on the investment, depending on the broker.
In range trading or boundary trading, the traders are trying to predict whether the price record of the options is inside or outside a certain boundary.
You have purchased a range option in the EUR/USD, which currently quoted at 1.20. The boundary is between 1.10 and 1.30. You believe that the EUR/USD will write after the expiry of the option to the 1.20.After the option is of course at 1.29 and has not broken through the range.This means your option is in profit and get a profit 89% – 650% on the investment depending on the broker.
How do I find the best broker for binary options?
Read the experiences and reviews of traders to binary options brokers in our binary options broker comparison and find that the best broker for binary options for their needs. You can also sign up to our site and receive updates together with a few ebooks regarding forex and binary options.