What is Binary Options
Binary Option, or as it is referred to as "digital option" "option with fixed return" option or "all or nothing". The word "binary" refers to the binary - zero or one (yes or no), that is, there are only two options for completion of the transaction with known results of the profitability, ie each of them brings to the investor a fixed income, the amount of which is known even before the conclusion of the transaction, or a fixed loss, the amount of which, as well known even before the conclusion of the transaction.
Another name - "digital options". Binary Options is a very simple tool, which only need to understand the price will go up or down (to determine the direction of exchange rate, ie, decide to grow or decrease the price of the underlying asset), the number of passed items price do not matter.
Binary Option can be purchased for a period of minutes to a year, but the most common and advantageous terms are from 15 minutes to an hour. During the purchase of any binary option, the broker immediately shows your profit and loss. Thus, binary options give you the opportunity to earn you from 70% to 90% of the profit in just a few minutes (in case of a successful transaction)! This is the most profitable stock exchange tool in the world!
Initially, binary option was considered very exotic instrument and did not have a broad consumer market, but today the situation has changed and the binary option has gained immense popularity around the world because of its simplicity and accessibility.
In binary options the value is only the direction of change in the price of the asset, but not the magnitude of this change.
The essence of binary options trading can be summarized as follows: "I believe that this currency (stock or index) will be the end of the day (hours, months, years) cost more than the cost of today. If my assumption is correct, then I would get a fixed return on the funds invested in the option (rate), from 75% to 90% (depending on the broker), if I'm wrong, you lose money invested in the deal, no more and no less.
The process of trade binary options in a nutshell
Most often it is a question as to whether the stock exchange price of the underlying asset is above (or below) a certain level. A fixed payment is made in the case of the option payoff, regardless of price (whether it is higher or lower) changes. Binary options allow you to know exactly the size of the payment and the possible risks before conclusion of the contract, which provides the ability to easily manage a large number of trading operations and gives the trader the confidence and peace of mind.
The entire process of trading binary options is made up of a few simple steps and does not take more than 10 minutes, and the result is simply amazing.
You simply place a bet in the casino, to the fact that, say, an hour price EUR / USD pair will be lower than the current (than now). If you were right, you get back the amount of your bet plus 70% - 90% from the top. If you make a mistake - you lose your bet (some brokers return part of the money-losing deal to 15%). The principle is very similar to a roulette wheel: red / black ... only instead of betting black / white our prices for financial instruments and the income does not depend on luck, but on your ability to correctly analyze the market situation and your money management skills, risk.
That's all you have to do not need to know how to change the price of an asset, because if it changes only by 1 point in the direction you have chosen, you will still get a guaranteed return!
Trade Binary Options
Binary options - versatile trading tools that can be used in any markets. Since they are becoming more and more popular among all types of traders, brokers are continually expanding portfolio of assets that provides the possibility of opening new markets for their clients and offer their customers (traders) is more and more favorable conditions (driving competition with each other).
What is a simple "option" (without the word "binary")
Option (lat. optio - choice, desire, option) - it is a contract in which the potential buyer or potential seller of an asset (a security, commodity) is an optional right to purchase or sell the asset at a predetermined price at a certain point in the future treaty, or during a certain period of time. This option seller assumes the obligation to make a reciprocal purchase or sale of an asset in accordance with the terms of the option sold.
Why binary options are very attractive for investors
This type of option allows profit even with minimal changes in the market. Even a shift of asset prices by only one point can yield a handsome profit to the investor. Enough to calculate, will be higher or lower than the value of the selected tool at the time of expiry (closing) option. And if the calculation would be correct, the investor gets a good profit.
The availability of binary options
Availability - plus a second binary options. You do not buy an asset, so you do not need big money for this. Suffice minimum investment to be in the market.
The advantages of binary options
• Opening of option positions require smaller amounts than in the spot market.
• You can limit your risk without limiting profit potential.
• An option gives a lot of opportunities for hedging.
• You choose the exercise price, expiration date and an option contract asset.
Binary Options - a major trend in online trading, and this is because they have many advantages over the traditional trade.
High profitability - trading in binary options can generate very high returns in very short periods of time. Most binary options include payments of 65% and 85%, which is a very high percentage, given that they can have a validity of 5 minutes. But at the same time it is worth noting the risks of losses of funds invested in case of an incorrect forecast.
Ease of access - Binary options are extremely accessible. There are a lot of decent brokers binary options online and open an account takes less than 5 minutes. Brokers have a very good financing options, so you can begin trading in minutes.
Small initial investment - You can start trading binary options with minimal investment. Some brokers accept deposits from $ 10 and sell options starting at $ 1 each can afford to invest and trade in these conditions.
Excellent money management potential - Money management is extremely easy to implement with the help of binary options trading. You always know exactly how much will be able to receive (income), and as you can lose when buying options. You can never lose more than investing in options that you purchase, and fixed payments allow you to create advanced money management strategies that can be very profitable.
There are several options of styles:
• American style option - option contract can be exercised holder throughout the time of purchase.
• European style option - option contract can be exercised only on the expiration of the term.
• Asian style option - option turns on the weighted average price for the whole period of the option throughout the time of purchase. Operations such options are held on the OTC markets, typical of the currency markets and metals markets.
Types of Binary Options
There are different types of binary options. The most common type of binary options are so-called "Up / Down-options". This type is offered by all brokers. Other important types of binary options are "the Touch" - options - and "Options border values."
What is a Call-Option
Call-option generates a profit when the market is on the rise and the value of assets goes up. If you think that the asset value will move up, you need to buy this option. This type is ideal for making a profit in a rising market.
The option, which brings income to the holder when the price of the underlying asset rises relative to the purchase price. If the option expires at the same price, the investor returns the full amount of its investment.
What is a Put-option
Put-option - is the opposite of Call-option, as he wins when the value of assets in the financial market is moving down. They are good for going down market when an investor wants to profit from the impairment of assets.
The option, which brings income to the holder when the price of the underlying asset is reduced relative to the purchase price. If the option expires at the same price, the investor returns the full amount of its investment.
Options border values
This - a special type of binary options, using which you predict whether the price will eventually be inside or outside some predefined "boundaries" after the time operation of the market. If you believe that the market will be very quiet and the main motion will not be visible until the expiration time of the opening, you need to buy "Inside" - options. They would benefit if the final price would be within certain limits. In the opposite situation, when you think that the market will move sharply in one direction and the final price in the end, would be out of bounds at the end of working hours of the market, you have to buy "Outside" - options. "Options boundary values" a little more exotic and not offered by all binary options brokers.
Binary Touch Option Option
Touch-options are a special type of binary option that is used to predict if, when asset prices reach a certain value.
Binary Touch Option means an option rate "Touch". Very interesting and promising option. Here, too, you need to determine the amount by which to change - growth or decline in the value of a particular financial asset. But its fundamental difference from the previous option is that touching it can occur at any time prior to the expiration of the option. And then it does not matter, how to behave in the curve of the financial schedule, took a touch, option won. The validity of these options begins one trading day and ends a year. However, the rate can win at any time prior to the expiration of the option. Loss is strictly fixed at the end of a specified term of the option.
Touch-options typically have very high payouts. They can reach 250% or even 350%. However, you should know that the higher the payment, the lower the chances of winning.
Binary option Touch Up and Touch Down
"Touch Up" - options generate profit if the asset price reaches a certain point, located above the starting price. In order to win a Touch Up-options, the market should move up to the minimum number of points in order to achieve the stated value. Guessing the direction of movement of the market is necessary, but not sufficient.
"Touch Down" - Options like the "Touch Up" - options, only with the difference that the value must be achieved, located below the initial price. This means that the Touch Down-options are used in falling markets (falling, "bear" market), when you are going to profit from its sharp decline.
And "Touch Up", and "Touch Down" - the options are ideal for volatile markets, when you can predict sharp movements in a short period of time. They are successfully used by traders on the news.
Binary Option Not Touch Option
Binary Option Not Touch Option implied rate "No Touch". As is evident from the name, you will be a winner if the price of the chosen asset throughout the term of the option is reached, or, in other words, will not affect the planned barrier you. The payout, and in this case depends on the magnitude and duration of barrier installed option. The minimum term of the option - one trading day, a maximum - a year. But unlike the previous option, rate Not Touch Option can bring a loss at any time, and to make a profit is possible only after the expiration of the option. The gap between the current price and you set a barrier will be inversely proportional to the possible income from option. That is, the barrier further, the gain at a rate less.
"No Touch" - options are used when you predict a very quiet market. They generate a profit when the asset prices will not reach the declared value. Few brokers offer "No Touch" - options, as they are less popular than other types of binary options.
Binary Option Out Range Option
Binary Option Out Range Option assumes bet "double-tap". In this case, the price of your chosen asset should, at any time prior to the expiration of the option, touch the upper and lower barriers. The problem, as they say, with two unknowns. All other conditions are similar to option one touch.
Binary Option In Range Option Binary Option In Range Option assumes bet "inside the band." That is, you selected asset price, an option for action must not touch, the time specified in the purchase, the upper and lower barriers. In other words, it will remain within the range bounded by the two levels. In the latter case, you return the money spent on the purchase of the option and receive a decent income. All other conditions are identical to option two touches.
Deposit on binary options trading and money management
Deposit - this is тhe money that you have on your personal account, opened at the broker site. This is your capital, which you placed in your account and ready to use it in the course of trading on the financial assets market. It forms the basis of your financial instruments and limits your possibilities.
What is the investment in binary option
Investments in the binary option - is the amount that you invest in a particular option, or, in other words, your bet in the game. When you purchase an option you set the amount of the investment in accordance with your financial capacity and trading tactics. The higher the amount of the investment, the greater the potential income (profit).
What is the strike price
Strike Price or the price of the contract - this is the original, the starting price at which you buy a call option,
or another - established in the contract price at which the buyer of the option has the further right to buy (sell) the underlying asset.
What is the expiration or expiry of the option period
Expiration - this time the option is exercised, ie its completion. A trader can choose different execution time - the end of an hour, the end of the day, the end of the week or the end of the month. Expiration - this time the option is exercised, the end of its term, and it becomes clear you win or lose.
Options Trading "within days"
Binary options are the most popular "within days", as they allow to make a profit in a short period of time. The validity of these options - from five minutes to several hours, but only within the boundaries of a single trading day. For intraday, most are betting on "Increase" or "Decrease" bets "above the barrier" or "below the barrier." According to the International Classification of this Digital Option and Digital Barrier Option.
Expiration of options is one of the most important aspects, without which in the options can not be made no deal…
Any transaction in the options market has its time - that is, during the beginning of the option 'period of exercise "and ending" expiration time ".