Definition of a Binary Option.
The word binary stands for “having two parts”. Basically you will need to either “Call” or “Put“. Binary Option trading has only 2 investment possibilities for you to predict and choose between.
What is a Binary Option ?
A binary option is an option offering a fixed return, they gives you the perfect opportunity to enter the financial markets with very little investment.
Binary option is all about speculation. It’s about guessing about the future price movement of an asset. Is the price of that asset going to increase or decrease at the time of expiry.
There is 4 types of Binary Options :
- High/Low : High/Low binary option let you choose whether the market price will close above or below the current market price.
- Quick : With the Quick binary option you can make a quick and profitable returns within a short period of time (from 30 seconds to 1 hour). The main goal with that Quick binary option is to make profitable returns within a short period of time.
- One Touch : One Touch binary option will allow you to decide if the market price will reach a certain value before the expiry time.
- Range : Range binary option is a prediction of whether the asset’s price will end within a predetermined range.
Who can trade Binary Options ?
Binary Option traders are mainly people who are looking for the freedom to invest. Anyone can start to trade binary options – from beginners to professionals. Some binary options brokers may offer you free demo for trading. Also, they can teach you about trading binary options.
What is the return for a Binary Option ?
A Binary Option will always offer a fixed return depending the broker you will choose. You will need to compare the different binary options brokers to find out what will be the best rates for your trades.
What is a Call Option ?
One investment possibility in Binary Option is expressed when you predict that the price of the asset will rise, this type of investment is named “Call” option.
What is a Put Option ?
The other possibility is presented when you predict that the price of the asset will fall, this type of investment is named “Put” option.
What is the Underlying Assets ?
An underlying is the basis of the Binary Option trading market. It’s a term used to describe the items that are being traded on the market, it goes from Commodities trading (gold, silver, cotton etc.), Stock trading (share in a company like Google, Apple, Microsoft etc.), Indices trading (Dow Jones, Nasdaq Composite etc.) and Currencies trading (EUR/USD, USD/CAD, AUD/USD etc.).
Most binary options brokers offers different kind of underlying assets for trading.
What is an Investment Amount and the amount limit ?
An Investment Amount is the amount of money that the trader will invest in a single binary option.
- The minimum investment amount for a single binary option is usually 10$. It may change depending the countries, currencies and the broker where you are trading.
- The maximum investment amount for a single binary option depend on the broker where you are trading but it’s usually $1,000.
Where can I learn how to Trade Binary Options ?
You will need to choose an asset that you wish to invest in. Let’s take exemple with the Gold. If you think that the price of gold is going to rise in the 3 hours, you just need to decide how much you want to invest in that asset , the time frames (in this case 3 hours) and instruments. The result could mean a 100% profit for you.
You can open an account and start online binary options trading right away or, if you would like to try trading for practice purposes first you can try Binary option demo platform with no risks involved.
Different brokers plateform offer online guides and demo for binary options trading.
What is the benefit of Binary Option trading ?
Binary options trading may involves some risks, but the benefits they present make them far more attractive and rewarding for prospective traders:
1. Higher ROI (return on investment)
Regardless of the underlying financial instrument you decide to trade on, your expected rate of return can reach up to 83% on any single trade. This means that on every $50 you invest, you might have the potential return up to $42.50. There is no other form of trading that offers such an amazing return on investment except binary options trading.
2. Ease of use
Binary options trading is very easy to understand. It doesn’t involve any complicated calculations or math formulas. Specifically designed trading platforms allow you to choose between possible outcomes: “Up” (also known as ”Call”) or “Down” (also known as “Put”).
3. Predetermined P&L
Before you even place your binary options trade, the risk and reward are already known. What this means is that you are taking a calculated risk and have the ability to know up front precisely how much you can profit.
4. Numerous trading features
All the 4 types of Binaries Options trading (High/Low, Quick, One Touch and Range).
What are CFD/FX ?
How Do You Trade A CFD?
The mechanics of trading CFD’s works much in the same way as buying or selling equities, futures or forex, except with a CFD you never actually own the underlying instrument. What you’re trading is the difference between the price when you first enter the trade and when you exit it. Hence the name, Contract For Difference. Most CFD providers also require that you cross the spread to enter or exit a position. Let’s run through a trade example for some clarity:
You want to BUY 100 “shares” in company XYZ, as you believe that the price is going up in the short term.
The current price is $10.55, the bid is $10.50 and the offer is $10.60.
- You click BUY, crossing the spread, and pay $10.60 for 100 “shares”.
- You’ve used $53 margin on your position (assuming a margin of 5%), instead of the $1050 + fees that you’d outlay if you bought the stock itself.
- The stock quickly moves to your target of $11, where you decide to sell.
- You click SELL, crossing the spread, and are filled at $10.95 on your 100 “shares”.
Congratulations! You made a profit of $35 (35c per “share” x 100) on your position.
As you can see, leverage is powerful. A $35 profit on a $53 margin (66%) is a far greater ROI than the 4-5% profit that you’d make buying the underlying, even if the total dollar amounts are a little less.
Here lies the attraction of leverage and CFDs. Of course, the opposite could also be possible. The equivalent move could wipe your CFD account of all of its capital (and more).
What is the CySEC ?
The Cyprus Securities and Exchange Commission, (Greek: Επιτροπή Κεφαλαιαγοράς) better known as CySEC, is the financial regulatory agency of Cyprus. As an EU member state, CySEC’s financial regulations and operations comply with the European MiFID financial harmonization law.
Basically, it’s the agency that will regulate the broker where you are going to trade binary options and protect you and your money from being scammed.
Why do I need to choose CySEC regulated broker ?
There are hundred of binary options brokers on the market however only few are regulated for binary options.
For the binary options industry, CySEC regulation is the most popular and covers EU based brokers.
How long dows it take to withdraw funds ?
Generally, withdrawal requests are processed within 3 business days. After the request is processed, it takes an average of 2 to 9 business days to transfer money to your account, depending on the payment method.