Why Binary Options are preferred by Modern Day Traders

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Why Binary Options are preferred by Modern Day Traders?

It has been noticed that in today’s market, traders are more inclined towards binary options than other forms of trading. This is not surprising considering the number of people who have taken up to binary options trading, ever since it was introduced back in 2008. The general consensus among the trading community is the binary options are the most profitable among all the different forms of trading options available. Also, you do not have to be armed with extensive knowledge about the market and its nuances to be successful in binary options trading. But are all these reasons really true? The subsequent paragraphs will reason out why binary options are so popular.

‘All or Nothing’ Assets

One of the most attractive features of binary options is its simplicity. There are no complicated rules, clauses and sub-clauses that you will have to be aware of before stepping into the trading arena. Most of the times, you can either double your investments or lose everything. Also, there is no tricky analysis involved in the trade when you consider all the factors, which could take the trade your way. When an investor takes a risk, he/she will be exactly aware of the magnitude of the risk. The only thing that you must consider while performing the trade is the price of the asset you are trading.

Four Types of Binary Options

There are basically four types of binary options available. They are called range, put, one touch and call. Call and put are also called as above and below respectively. Out of the four types mentioned above, the call and put options are most used by traders around the world as they are the simplest and the most profitable options.

When you see a trading platform, you will see assets which are marked either by upwards or downwards arrows. These are the call and put options. While trading with them, profits will range around 70% and higher. A trade will last for at least 15 minutes. However, the option trades can last up to 30 days or even higher sometimes. Also, there is no need of a huge initial investment if you want to involve yourself in binary options.

A Guide to Trading Binary Options in the U.S.

Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?

Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.

Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.

Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.

U.S. Binary Options Explained

Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.

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Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?

If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.

The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.

Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.

The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.

A Zero-Sum Game

Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.

Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.

A trader may purchase multiple contracts if desired. Here’s another example:

  • NASDAQ US Tech 100 index > $3,784 (11 a.m.).

The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.

You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.

Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.

Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)

Binary Options Trading

Binary options are specific ways for trading. Being different by ordinary trading methods, there are additional terms that are needed to learn the basics. Some strategies for beginners is binary options. Keep in mind that even though distinguished, the binary options are financial instruments for getting an outcome. This means that some of the established rules from financial trading apply to binary options as well. In this article, we would like to introduce you to the fundamentals behind binary options trading. Let`s get started step by step, so you can learn how to move forward in financial trading using binary options. As a bonus, you will also receive the full list of the best and most reliable binary options brokers for both beginners and advanced traders. The binary option trading guide is about to begin!
Our premium broker or the month offer:

Background history of binary options

The origin of binary options is American. Binary options trading was established in the USA. Introduced in 2008, binary options were unlocked for financial trading and online trading platforms, as well. Today these platforms are numerous, as day traders grew acclimated to the new style of trading. This is probably due to the main feature of the binary options – they are extremely flexible and easy to be operated. In short, the philosophy behind binary options is to give the trader the opportunity for predicting any kind of situation on the market – even the lack of any situation. On the other side, binary options have been determined as a potential risk for traders, which once again, mean you need to be very well prepared for trading with them. In June 2020, the US Securities and Exchange Commission has made a warning to be very attentive to avoid fraudulent schemes. Last, but not least, remember that binary options are also well-known with other names such as “all-or-nothing options”, digital options and fixed return options (FROs). The main goal that any trader should reach first is to find the best binary options brokers for their needs.

What is the binary options trading?

Binary options are categorised as exotic Forex trading options. Meanwhile, though, they are not too difficult for a beginner to learn. The traders predict the shakes and the happenings of an asset. The asset, on the other side, might be a currency – in Forex trading only – stock, commodity or even an index. The binary options have mandatory expiration dates. The expiration date in binary options is the exact time when the trader will either lose, or win. The expiration varies, but in general it lasts from 1 minute to the end of the day. Some binary options web sites offer the traders to choose the expiration date. It might be a short, medium or long term expiration. As a general rule, when a buyer trades with binary options, the potential return is always certain. This factor distinguishes the binary options from the ordinary financial options, where the spectrum of payoffs is both large and continues. Binary options are always sold against fixed expiration time and they can be either call/up or put/down. A good start in this type of trading would be to use some binary options bonus offers that variour brokers offer.

Start trading now with one of the best Binary options brokers in the world – TopOption – free tutorials and learning center

Types of binary options on the trading market

There are several types of binary options on the trading market. It is recommended to try them all so you can figure it out which one suits you best. Check out them now:

High-low binary options

They are the most popular binary options on the trading market. Also, they are the easiest to learn, and often chosen as the best opportunity for a quick profit. What the trader should estimate, when buying high-low binary options, is whether the market price on the fixed expiration date will end up higher or lower than the current and available offered price. The payoff here is predetermined. Some binary options brokers add one more option for payoff, fully or for a partial return.

Range high-low binary options

The trader here chooses from high and low. What he or she needs to determine is whether the final offer price is going to be higher or lower than the current one. When the moment for determining comes, a range for the prediction will be shown. In case the expiration rate refers to this range, you will get your outcome. Otherwise, you lose your investment.

One touch binary options

Here, you will receive a boundary line. It is described as above and below the current rate. The trader should choose one of them – the below or the above current offered price rate. Usually, the one touch binary options are available for buying during the weekends – when the markets are closed. The trading, though, is made during the week. The one touch binary options trading is usually preferred by the traders. In this case, traders determine that the price of an undefined asses will become close to the predefined rate in few days (or during the week). Also, they choose this type of binary options due to uncertainty about the sustainability of price.

60 Second binary options

Recently, they have become the most popular binary options. The big advantage behind them is a quick chance for a gain. In case the value of the asset is moving in a particular direction, the trader can easily profit and make the most money off this type of binary option. This quick earning and fast trading method turn the 60 second binary options into super financial opportunities.

Binary Meta options

This binary option has become quite attractive over the past few years. They give a chance for the trader to sell early or double the earning as a mid-trade. These binary options are provided only by few binary options brokers, which also offer their clients interesting and innovative tools for examining the history of the assets.

The simplest and shortest binary options trading guide

We are offering you a guide with all the beginner steps you need to take for your start the binary options trading experience. First, find out the two alternatives for final results. Most of the binary options platforms offer two main final outcomes – Put and Call. Put describes your personal prediction of a price decline. Meanwhile, the Call shows the eventual increasing of the current price. Next, you will need to determine your own opinion, which in binary options trading is your individual prediction, when the expiration date comes. To do so, you need to estimate the current situation on the market and to bind your asset with the rise/fall of the available price. You will also need to check the implicit transactions fees of the binary options. Do your research on the exchanges where binary options are traded and find out how a contract price is lately estimated. Last, but not least – get the best binary options broker!

Here is a list of the most reliable and reputable binary options brokers

    • TopOption

Here you can make a maximum profit of 85% of the price. The minimum deposit here is 100 EURO. The TopOption broker covers the UK, European, Asian and US markets. Read Here a Detailed Review of TopOption.

This web site is quite suitable for freshmen in binary options trading. It is also well-known as the most user friendly broker among the whole online trading platforms list. It also has a mobile version and the 60 second binary options are very popular.

This is the top binary options broker, but it is definitely recommended for advanced players on the market. The trade limit is 3000 here and the maximum profit, though, is about 91% of the Banc De Binary. This web site covers all the international markets. Read review of Bank de Binary here

This binary options platform is well-known for the fact that it has been created and operated by professionals in the field. Probably, this turns the binary option broker into a reliable, modern and contemporary online trading platform. It offers the following binary options trading systems – high and low, above and below, 60 seconds binary options and many others. READ HERE – review of our top binary options broker – 24Option

Here we are pointing the TradeRush binary options broker since it provides more than 100 different assets. They are mainly focused on trading European two-way options. The maximum outcome is up to 81%. What makes the TradeRush so attractive is the detailed guide with binary options strategies and useful tips.

Last but not least is one of our premium partners – Grand Option binary options broker. This operator offers a fantastic platform, offers and help for new and experienced traders. The benefits trading with them are numerous, if you are interested read here detailed review of Grand Option.

Why trading with binary options?

Naming all the advantages behind the binary options trading is almost impossible. However, binary options brokers are usually thrilled with this trading method for few main reasons. First of all, they are more simple and they require less estimations and analyses on the global market. Also, a trader needs a sense of direction for the price and no other special skills. Binary options are definitely an option for a beginner to trading. This is also proved by the fact that binary options have potential risk you always know and can predict. Also, you are able to dive right in with the clear idea how much you can earn. The risk is transparent and you can use all the available and known trading and hedging binary options strategies. Binary options are safe, because they provide contracts – even though with a short term duration. Meanwhile, though, you can browse the web and find even binary options platforms, where the contract can last for a whole year. Also, the binary options – unlike the ordinary options and trading systems – the final outcome isn’t proportional to the amount by which the final results end “in the money”. Add to these the low investment, which is always a real strong point for any trader – regardless his or her reputation and experience. Last, but not least, the benefits of trading with binary options are also the wide range of internationally traded assets, the chance for trading anywhere and at any time without any limits of the markets or even the gadget you use. Most of the binary options platforms come with mobile web site versions, as well. The simplified trading and determined risks are the key advantages that make the binary options really thrilling, intriguing and so widely spread across the entire online trading audience.

Conclusion and final words

Use this information to become more confident and equip yourself with the necessary knowledge to step into the world of binary options. Never underestimate the online guides and tips you can find online. The deeper you get into the binary options trading, the faster you will be able to receive the desired outcomes. Last, but not least – remember that as in any other trading type, binary options hide their own risks and weak points. The good thing is that you find out about them even before making your binary options purchase.

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Best Binary Options Brokers 2020:
  • Binarium

    Best Binary Options Broker!
    Perfect Choice For Beginners and Middle-Level Traders!
    Free Demo Account! Free Education!

  • Binomo

    Honest broker!

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