What are Binary Options?
Binary Options are referred to as the simplest trading product in the financial sector. They have become the fastest growing segment of online trading over the past 6 years. As a mass market financial instrument Binary Options are extremely flexible and give e-Traders Options that didn’t exist with previous trading styles. Binary Options are designed for short term investment periods and can be used to hedge your trading portfolio. They have incredibly high payout rates and with minimal requirement for investment amounts.
Throughout the entire trade process, investors know exactly what the maximum profit/loss ratio of each trade, which gives binary option traders a form of risk management that was never possible before with traditional option purchases.
- Nearly every type of underlying asset can be traded on a Binary Option platform including:
- Currency Pairs
Binary Options allow e-Traders to purchase an option that pays either a fixed amount – or – nothing. Also known as a Fixed Return Option, FRO, or Digital Option. With a Fixed Return there is no surprise at the time the expiry ends. Trades have the possibility of landing in either two positions, hence the word binary. When a trade lands ‘In the Money’ the trader will receive the fixed amount stated previous to the trade purchase. When a trade lands ‘Out of the Money’ the trader will lose their entire investment amount.
To make a trade, the investor simply selects the asset they want to trade, the direction the asset will move, then selects the expiry time of the option, and finally enters in the invest amount. When the expiry time ends depending on the outcome of the trade the trader will either land ‘In or Out of the Money’.