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What Are Binary Options?

What Are Binary Options?

A Binary Option is when a user predicts whether the price of a commodity, currency, stock or index will rise or fall (UP or DOWN) in a designated time period. Therefore the trade never owns or purchases an asset, they are only predicting which way the price will move. Binary Options have become increase popular due to its simplicity, as there are only two possible outcomes.


Binary options deliver a fixed return on every trade that is created, depending on whether the trade was “In The Money”, “Out Of The Money” or alternatively a “Tie”. Binary options (also known as digital options) tend to be among of the fastest expanding financial trading products in the world because they are simple and quick. Traders know the outcome or return before they make the trade and therefore this simplistic approach has made them extremely attractive to financial traders.


When purchasing a binary option the possible return it offers is clear and known before the trader has made their choice. Binary options can be obtained on almost any financial product, for example, commodities, currencies, indices and stocks. Traders can choose the direction of the trader by purchasing a “Call” or a “Put”. This means that an investor can go “Up” or “Down” on any financial product by purchasing a binary option e.g. will USD/JPY go UP or DOWN? Binary options are obtained against a set expiry time; these times can range from 5-30 minutes, one hour or at the end of the trading day. Once binary options have been bought, they can’t be resold until the expiry time is up.


Binary options have been around for a long time, although they have only gained serious popularity in the last few years. Why? This is because they were not available online and used to be seen as complex contracts. Although once the OCC (Options Clearing Corporation) allowed binary options to be traded online there was an explosion of online binary options platforms. These binary options traders offered a simplified version of the offline contracts, which allowed experienced and non-experienced users to exchange binary options online.




What Are Binary Options Signals?


Binary Options Signal providers offer trading signals to subscribed customers. Expert traders, market news, and exclusive software often generate these signals. Signal providers often boast an impressive 85% accuracy (win ratio). This level of accuracy will help any novice or new trader to quickly earn a steady profit.


Although there are a number of services providers and packages available, the results are often similar. The signals, which are often provided by email, will offer live hints and trading tips every day. They will include the time and price to enter the market as well as the predicted direction of the asset.


Once a user receives a binary options signal they can then choose whether to invest or take advantage of that particular signal. If you’re skeptical about using a signal service then a good thing to do is sign up for their free trial and see if their predictions are correct or not. You can do this without trading and by watching the graphs.


Why Trade Binary Options?




Why Trade Binary Options?


The simplicity of trading binary options has ensured its popularity. Traders can get a high return from a simple click in as little as 60 seconds. Traders only have to predict the movement (Up or Down) within a certain time period, unlike traditional trading where it’s a lot more complex as they pay-out relies on the amount invested. An example of this is whether you think the price of Oil will go UP (Call) or DOWN (Put) by the end of the day. Therefore the broker already calculates a set return before you even trade, this minimalistic approach allows traders to make an easy investment judgement and traders can earn up to 81% on their trade.


The amount bought is irrelevant to the percentage of profit earned; if a trader puts down $5 or $500 the profit percentage is the same. This is why binary options are more profitable than any other type of trading. Another advantage is the ability to implement and follow strategies and techniques to ensure a trader’s success and profits. Along with being able to calculate your return, customers can find free or paid binary signals online. Traders are able to follow their own guidelines to make money with binary options, such as doubling up on loosing trades.


Think of it in this way; in theory, any trader has a 50/50 chance to predict whether the trade will go UP or DOWN, therefore without following any guidance or the ‘Traders Choice’ your chances of winning are 50%. This would essentially be like playing roulette with red or black (although users would only get an 80% return). Although every experienced trader knows that the winning rate is substantially more than 50%, due to the above reasons. So a good analysis of the market, watching the binary options graphs, and using the ‘traders’ choice’ to your advantage will assure you of success.


Where Can I Trade Binary Options?


All someone needs to trade binary options is an Internet connection and a computer (PC or MAC). Users just need to sign up to a binary options broker. There is a large selection of brokers because the industry has very low barriers of entry and therefore some brokers are better than others. Binary-OptionsReview.com has only reviewed and compared the best and most prestigious binary options brokers for obvious reasons. Check out our comparison table and ‘full reviews’ of each trading platform to see which binary options broker is the best for you.

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