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Binary Options Trading
The Joy of Binary Options Trading
There are few things as black and white in life as binary options trading, which is what makes it so appealing to some investors. It’s an entirely different kind of animal. At the time of an option’s expiration, you either receive an established amount of money or nothing at all.
Let’s use a hypothetical explanation to dissect binary options trading: Suppose that you want to purchase a binary option for shares of American Widgets with a strike price of $100 and a binary payoff of $500. If in an hour or at the end of the day (depending on what the expiration is) American Widgets is trading over $100, you’ll receive the binary payoff of $500. On the other hand, if American Widgets is trading at less than the $100 strike price, you get nothing.
Binary options trading therefore carries more significant risks than traditional trading methods, and requires careful strategy to be executed if you want to triumph in this highly demanding industry. Binary options trading consists of an all or nothing approach to betting. This is comparable to playing one of many online casino games, the result is simple you’re either going to win big or win nothing at all. This is the same approach that should be executed and known when becoming involved in binary options trading. Despite this, due to the high risk nature of this trading platform, the potential payoffs are often far greater than what can be achieved in traditional trading methods.
Binary options trading is essentially a sort of all-or-nothing option in which you must decide if something is going to trade above a certain point or below a certain point. In Forex binary options, you decide if a currency pair is going to go above or below a certain price. You select either “call” or “put” depending upon which direction you believe the pair will take at the end of the hour. It’s one more risk management tool in your investment arsenal. If a pair looks like it’s going to be volatile, you can grab hold of the opportunity through FX binary options trading.
If you enjoy determining the probability of a future event occurring, you’ll enjoy binary options. You also have an exact loss amount and an exact profit amount that are known ahead of time. The binary option also prevents you from being “stopped out” because of a brief deep fluctuation that occurs before the expiration time. Many traders enjoy this trading method over spot trading because you have a lot to gain without exposing yourself to high levels of risk.