Binary Options are the most popular trading instrument at option500 platform. It is by far the easiest tool for trading, especially for beginners.
You can trade very easily, in just three steps. You choose the asset you want to trade, you enter the amount that you want to invest and you choose whether the price of the asset will be above or below at the time of expiry.
In case you choose an expiry time that is very close to current time, the transaction might not be completed. In such a case, you will have to choose a later expiration time.
This specific category of options differs from the others with respect of expiration time, as available expirations refer to the same day.
For example, if the price of gold is currently at 1500 dollars per Oz, will it rise or fall by 5:00 PM? The trader never purchases an asset, only predicts the market direction. Correct prediction results in an “in-the-money” trade.
Investing your money wisely
Are you recently considering investing your hard-earned cash in the stock market but you have no idea how? Or you just want to wisely invest your extra money? If you are feeling lucky, there are many ways to grow your money without leaving the comforts of your home.
Trading in binary options is the best option for you.
Binary Options Trading is a simple “yes” or “no” proposition whether an underlying asset will be below or above at a certain price and time. A binary trader buys or sells whether they think it is wise to purchase or let go of the asset. The simplicity of binary trading adds to its appeal among traders and newbies in the financial markets. However, trading binary options still require skills in fully understanding how the options work, what best markets and schedules are best to trade with binary options.
A skilled binary trader usually chooses binary trading options as an alternative when considering “speculating” or “hedging”. Speculation is a way of asset trading which has a high risk of losing majority or all the initial payout with the hope of a significant gain. In the situation of speculation, there is a higher risk of losing more than the possibility of gaining. More often than not, it is hard to identify whether it is a speculation or an investment. The classification depends on various factors such as the nature of the asset, the holding period and the leverage.
Meanwhile, hedging is an investment to lower the risk of negative price movements in the security. One perfect example is getting a flood insurance to protect your house when you happen to live in a flood-prone area. However, hedging could be costly as the trader gives away some chips to ensure gains. The perfect hedge, on the other hand, is one move that removes all the risks in a position.
Trading Binary Options examples:
Just like in any other financial markets, the binary option has a bid and ask price. At a given point in time, the binary trading options have two-way price quotation which includes the best price at which the trader can sell or buy the security. On the other hand, the bidding price is the ceiling price which a seller is willing to get for letting go of the security. The transaction happens when both the buyer and seller settle on a price for the security.
The binary option is usually between $0 and $100. To explain further, for example, the given binary may be trading at $42.50 (bidding price) and $44.50 (offering price) at 1:30 in the afternoon. If the trader buys the option right away the amount $44.50 should be paid while if the decision is to sell it, the security should be sold at$42.50. Moving on, if the trader decides to buy the security at $44.50 and if at 2:00 in the afternoon the price of the gold went beyond the set amount, the binary option expires and its worth becomes $100. In this example, the trader makes a profit since the security was bought at a lower price. This scenario is called “in the money.”
The reverse situation, also known as “out of the money”, happens when the price of the gold went below the given amount at the prescribed time. The binary option then expires at $0. Unfortunately, the trader loses the $44.50 invested.
Investing for the First Time
Even if the binary options are the simplest ways to trade price fluctuations in numerous global markets, the skill of the trader is crucial in understanding the risks and rewards of these instruments.
If you are investing for the first time, please bear in mind that these instruments are different from the traditional options. Once you buy or sell, options have different payout schemes, fees, and risks. The liquidity structure and the investment process, in general, are entirely different. The binary trading options are classified as exotic options. These options have unique features which allow these to adapt to situations that might require devious financial engineering. Using these tidy options, the investor who faces a high-risk situation might find the solution.
These options are suitable for high-level active portfolio management and case-specific solutions. There are various kinds of exotic options but if the trader is skilled and fully understands how the trading goes, earning is really is easy.
Advantages of Binary Trading Options
The major advantage of trading binary options is that the risk and reward are identified. The situation is not affected whether the market moves positively or against the trader. The results are very clear and simple: the trader can either win the specified amount or let it go. Moreover, there are no fees such as commissions when trading these instruments. The options are very simple. To use and to start trading, there is only one question needed to be answered: Is the asset going up or going down?
Another good point of trading with binary options is that there are no liquidity concerns. Since the trader does not own the asset, brokers can only offer countless strike prices and expiration dates to attract the trader. Finally, with these instruments, the trader can use multiple asset classes in global markets any time a market is open anywhere in the world.
Let’s start trading binary option with Option500 safe & secure trading platform