Binary option is one of the trading methods through which one can make money via the internet. In binary option, the trader determines whether the price of a financial product or asset like gold will appreciate or depreciate within a stipulated time. What matters in binary option is the trader’s ability to predict the price movement correctly within a stipulated time frame. If the trader predicates correctly, he will be rewarded but if he does not predicate correctly, he loses his bet.
One big difference between traditional option and binary option is that in binary options there are only two possible outcomes. At the time of opening the trade, the possible payout is already fixed. But this is not the case in traditional option. One cannot know before the opening of the trade the amount of money that will be risked or gained in the trade. In binary option, the reverse is the case. Knowing the exact amount to be risked in the trade, the trader can control the risk involved.
In binary options, there are a number of commodities that can be traded. One can choose from among 180 assets such as currencies, stocks, indices, commodities, gold, silver and other financial products. It is also possible for the trader to open more than one trade at the same time. It all also depends on what the trader wants. One is free to trade only one product or many products.
Trading in binary option is not complicated at all. It is a straight-forward type of trading. This is one advantage that it has over other type of trading. There is always an expiry period for the trade. So, the trader has to speculate the price movement within this set time. If a trader thinks that the value of the product being traded will increase within the set time, he has to click on the Call button. But if he thinks the contrary, then he has to click on the PUT button. When the right speculation is made before the expiration time, it is said that your contract is “in the money” but if you make a wrong prediction and the contracts expires, you are said to be “out-the-money” meaning that you have lost your money.
Trading in binary option involves three steps which include:
· Choosing an asset to trade
· Speculating the price movement for the asset – CALL or PUT
· Choosing the amount that you will like to trade with and then clicking the right button for your prediction
Advantages of binary option
Binary option has some advantages over other types of trading. Here are some of the advantages of binary options.
· It is easy to learn.
· Trading does not involve any complicated process. You don’t need any special skills in order to start trading in binary option.
· It has a very high payout within short period of time.
· Setting up a binary option account is simple because no download is involved.