There’s a lot of debate about binary options – while some claim to have lost all, there are many who have moved their entire trading portfolio to binary options. The fear around this field is due in large part to the misinformation surrounding the platform. VIPInvests aims to set the facts straight:
What are Binary Options:
Binaries are a simple and straightforward trading option used by millions of investors across the world. The payoff is structured, i.e. you either a fixed amount of money when the option expires, or you win nothing. To begin with, traders have to choose a binary option – the most common are the high – low option.
What are the assets commonly traded in the binary options platform:
You’ll have to then choose an asset to trade; the most common assets include:
- Indices – NASDAQ, Dow Jones, FTSE, Nikkei, etc.
- Currency – Combination of different currencies like USD, GBP, EUR, AUD, etc.
- Commodities – Coffee, gold, oil, silver, etc.
- Stocks – of all major companies.
How is the trade executed:
The trader has to predict if the market is expected to rise or fall, and by how many points. Traders have to take a call within a fixed time called the expiry period. If the trader had predicted an upward trend and at the end of the expiry period the price is above the strike price, he/she gets a fixed return regardless of the rate at which the instrument moved. Traders making an incorrect strike price, lose their money. Traders can predict outcomes, either way, i.e. they can predict if the market is likely to fall (in the same way where they anticipate a hike). When traders forecast a rise, they do a ‘call,’ and when they predict a fall, they do a ‘put.’ Even in the case of a put, the market should have fallen below the strike price, for the trader to make money.
Interested in binary options trading? Call VIP Invests for more information…