Binary options are estimates of underlying assets performance during a given time frame. To understand the beauty of binary option trading, let’s first take a look at how investment in other trading markets usually works.
In most forms of investment the investors actually purchases the asset they invest in and the value of the profit and loss is determined upon the changing value of the asset. If the investor sells the asset back to the market whenever its value increases then they’re making a profit, and if they sell the asset back to the market when its value decreases, then their money is lost.
This type of investment requires the investor to constantly worry about when to sell the asset and get out of the market to avoid exposing his entire account to the market’s volatility. Conversely, Binary option trading is simpler.
In binary option we trade on the market and not in the market like other trading methods, and thus the amount of psychological stress isn’t expressed, as you are just predicting the asset’s movement for a predetermine time frame.
Definition of binary options
The word binary stands for “having two parts”. Generally speaking, all you need to do is predict either “Call” or “Put“. Binary options trading has only two investment possibilities for you to predict and then choose between.
One investment possibility is expressed when you predict that the price of the asset will rise, this type of investment is named “Call” option. The other possibility is presented when you predict that the price of the asset will fall, this type of investment is named “Put” option.
Choosing an asset is the first step of your investment. For instance, if you have an interest in gold prices, you may choose to place a binary investment in gold. Obviously, the more familiar you’re with the gold market the better your chances are of successfully predicting the fluctuations of gold prices.
How do I trade binary options?
You begin by choosing an asset you wish to invest in, let’s say that you are in fact interested in the gold market. If you think that the price of gold is going to rise in the next hour – you simply decide how much you want to invest, the time frames (in this case 1 hour) and instruments. The consequence of these actions could mean a 100% profit on your behalf.
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