What Are Binary Options

So what are Binary Options ?

A binary option is a financial option whereby the monetary outcome can be a fixed amount or nothing. There are actually two types of binary options, which you might not have heard of, and these are; cash-or-nothing binary option & asset-or-nothing binary option. The type of option that is most frequent is the cash-or-nothing type of option.

How do they work?

Binary Options are a simple yes or no contract. You are basically placing a bet as to whether a certain asset will be above or below a certain price, at a certain time. If someone believes that for instance, EUR/USD will rise in value over the next 60 seconds, then he/she will place a buy option on that pair. If the pair does rise above his/hers entry level, then they will have won. If however the pair falls below the entry point, then they will have lost. One of the good things about trading binary options is that you can obviously make money, unlike normal trading, if you enter into a position and lose, you only lose the money you put into that trade. Whereas with normal trading, if you’re on the losing side of a trade, you can lose more than what you put in.

Binary Options

 

So you can see here is the typical screen of someone using Binary Options on their phone. Let’s have a look at some of the important features that you’ll see on a typical platform:

  1. First and foremost, this is the chart area where you’ll see live price movement. It will chop and change very frequently, especially on lower time frames such as the 1 minute. The higher you go the slower it will move.
  2. This is asset that you’ll be placing your trades on. It’s extremely important to make sure you know which asset you’re looking at and trading.
  3. This shows you how much time is left on your option. If you bought and the asset is above your entry you will profit. If you are selling and price is below your entry then you’ll profit.
  4. This lets you choose how much you wish to invest in a particular option. The more you invest, the higher your return will be.
  5. These 2 buttons initiate a buying option or a selling option on the asset.
  6. This shows when your option expires.