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What are Binary Options

Trading BinariesThey do not consist of buying or selling—or the right to buy or sell—an actual asset, as traditional options present us. Rather, they solely deal with asset movement; this is why the assets being traded are called underlying assets. In short, you want to predict the price patterns of the underlying asset.

Risk Warning – “Investors can lose all their capital by trading binary options”
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First, you select an underlying asset. If you are trading binary options in the usual manner you either select if the price will be up or down from its current price at the end of the given time period. If you think the price will increase, you want to have a call option, and if you think the price will decrease, you want a put option. The end of the given time period is called the expiration time. When the expiration time is over, the trade ends and you are either given the payout previously agreed upon (if you were right in your prediction) or you lose your money (if you were wrong).

You don’t need to be right by a lot when you are trading binary options, but you need to be right by at least a tick in order to secure a profit. When trading stock assets, this means you need to be right by at least a penny. In currencies, you can be right by as little as .0001 and still receive your full payout. This makes binary options a bit more attractive than traditional buying and selling because you only need to be right by the bare minimum to receive a full payout. Rather than sweating it out and trying to milk a profit for all it’s worth, you can be right by just a little and still see big payouts.

There are other types of binary options than the traditional up/down (call/put), too. Boundary options attempt to guess whether an underlying asset will fall inside or outside of a given range. One touch options will pose the question of whether or not a given price will be obtained at any point during the life of the open binary option trade. These other options allow you to customize your trading in a manner that other types of trading don’t often let you. This is one of the many factors that make binary options unique and beatable for the average trader. There is still a large amount of skill needed to be successful, but by being able to tailor make your own trades, binary options become more attractive to the average trader looking to secure a profit.

Binary options work on behalf of the broker because when you are wrong, you lose more than you make when you are correct. Assuming a 50/50 split in correct to incorrect trades, the binary options broker such as Bank De Binary takes in a lot of extra money, thus making them more profitable. Assume that you are given an industry standard 75 percent return on your correct trades and receive 15 percent back on your incorrect trades. This still gives brokers an average of 10% profit per trade.

Despite this gap, you can be successful with binary options. You just need to be right more often than you are wrong. If you are merely a 50/50 trader, given the above scenario, you will be losing 10 percent of your trading capital with every trade. The trick here is to reverse this and be right as often as possible in order to overcome this deficit. This is not easy, but it is possible and once you gain experience, with a good strategy you can join the ranks of successful binary options traders.

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