Trading with binary options
Binary options are also called digital options and are a new type of financial instrument. Traders can profit from both falling and rising prices. Compared to classic options, these can already be traded on the stock exchange with a small capital investment. Therefore, trading with binary options is very interesting especially for beginners.
How do binary options work?
As the name “binary” already reveals, binary options are about a simple operating principle. There are two states available for an option: “in the money” or “out of the money”. This is comparable to a digital state, which consists of either “1” or “0”. The decisive factor is whether the option at the end of the option term (this is the expiration date) is in the money or not.
If one sets on rising courses, the option “Call” is selected. With a “Put” option is bet on a falling price. In order to make a positive conclusion, the call or put option must be at a higher level at the end of the respective term than at the time of entry. When trading with binary options there is thus only one directional decision. The asset on which speculation is made, acts thereby with a so-called underlying asset.
Trading with binary options is therefore quite simple in principle. It is not bet on an asset (asset), but on the respective price trend based on the underlying asset. Here you only have to decide whether a “Put” or “Call” options are set. If at the end of the respective option term the direction was correct, a profit comparatively high with other investment objects is obtained.
With binary option high profits are possible | © Marco Scisetti – Fotolia.com
Rising or falling prices
Trading with binary options is about rising prices (call) or falling prices (put). The terms of the options are between 60 seconds or even up to a year. In most cases, the returns are in a range of 65 to 85 percent. Losses are limited thereby only to the invested capital.
The risk when trading with binary options is always limited to the transacted stake. A premature stop, as for example with shares, does not exist here. Only the respective price at the end of the term is decisive. This limits the risk and makes it very calculable, which is a great advantage.
With sometimes very attractive returns of up to 85 percent (sometimes even more), a lot can be gained after a short time. Binary options are available with different durations of days, weeks, a month or even a whole year. With an “aggressive” trading also 60 seconds are enough for a trade.
With binary options can be achieved by rising or falling prices very considerable returns. With the help of special trading strategies, the plan can be controlled even more effectively and specifically. A high knowledge of the trading sector serves as a basis and can be the cornerstone for a successful strategy.
However, in order to trade binary options successfully, a solid basic knowledge is required. One should therefore deal in detail with this financial instrument and start with small stakes at first.