What Is Binary Options trading explained by ForexSQ team, In this article you will know what is trading binary options or what is a binary option and how you can trade binary option online with top brokers. Also an infographoic made by ForexSQ team about what is binary option trading .
What Is Binary Options Trading
A binary option is a type of option in which the payoff can take only two possible outcomes, either some fixed monetary amount (or a precise predefined quantity or units of some asset) or nothing at all (in contrast to ordinary financial options that typically have a continuous spectrum of payoff).
Binary options are classed as exotic options, yet binaries are extremely simple to use and understand functionally.
The most common binary option is a “high-low” option. Providing access to stocks, indices, commodities and foreign exchange, a high-low option is also called a fixed-return option.
This is because the option has an expiry date/time and also what is called a strike price.
If a trader wagers correctly on the market’s direction and the price at the time of expiry is on the correct side of the strike price, the trader is paid a fixed return regardless of how much the instrument moved.
A trader who wagers incorrectly on the market’s direction loses her/his investment.
UK Versus U.S. Binary Options Difference
These brokers make their money from the percentage discrepancy between what they pay out on winning trades and what they collect from losing trades.
While there are exceptions, these binary options are meant to be held until expiry in an “all or nothing” payout structure.
Most foreign binary options brokers are not legally allowed to solicit U.S. residents for trading purposes, unless that broker is registered with a U.S. regulatory body such as the SEC or Commodities Futures Trading Commission. If you want to know more what is binary options trading continue reading.
How To Trade Binary Options
If a trader believes the market is rising, she/he would purchase a “call.”
If the trader believes the market is falling, she/he would buy a “put.”
For a call to make money, the price must be above the strike price at the expiry time.
For a put to make money, the price must be below the strike price at the expiry time. The strike price, expiry, payout and risk are all disclosed at the trade’s outset.
For most high-low options outside the U.S., the strike price is the current price or rate of the underlying financial product, such as the S&P 500 index, EUR/USD currency pair or a particular stock.
Therefore, the trader is wagering whether the future price at expiry will be higher or lower than the current price.
Now you know what is binary option trading but continue reading to know more about binary trading brokers.
What Is Trading Binary Options Brokers
Now you know what is binary option trading but lets know more about what is binary options trading brokers, to trade binary Options you need a broker to provide you demo or real trading account.
But there are a lot of binary options brokers and choose the top one to trade options is really hard, so you must choose you broker wisely and always check regulation of the Binary Options broker you want to trade.
ForexSQ team provide you the list of the best online trading brokers include Stocks brokers, CFD Trading brokers and Online Forex Brokers but if you want to use our professional traders to choose the best binary options brokers so simply contact us to introduce you the top one.
Binary Options Trading Platform
To trade options you need an online trading platform, and to download binary options trading platforms you need to sign up with a broker then download desktop or mobile binary options trading platform.
Usually brokers provide you the trading platform free of charge and you just need to sign up and trading options in demo or real account.
This means if you don’t have money to trade options in a real account then you can practice in a demo account free of charge.
What Is Binary Option Trading System
To know what is a binary option trading system i must say binary options are offered against a fixed expiry time. For example, a purchase is made of a binary cash-or-nothing call option on XYZ Corp’s stock struck at $100 with a binary payoff of $1000.
Then, if at the future maturity date, the stock is trading at or above $100, $1000 is received.
What Is Binary Options Trading Infographic
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