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Explaining Binary Options to Beginners - A Guide

Jun 08, 2020

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A financial instrument that is based on a yes or no question. Every trade would start with a question – will the asset have a higher or lower price at this time? If it’s yes, then you can buy the option. And if it’s a no, sell the option. Binary options trading’s payout would either be a fixed amount or nothing at all.

 

As an active trader, we know you are busy browsing markets every day. You encounter challenges all the time. The last thing you want is to be slowed down with more difficulties and hard to learn parts with a brokerage.

When you trade, we know you like to concentrate on the market and your position, not on a set of unnecessarily complicated products.

 

How does it work?

 

Binary Options have three components: the strike price, underlying asset, and expiry time. Learn these three and you will understand the basics of binary options trading.

  • The first in trade execution is to choose an asset or event to trade. Your trade will rely on the price movement of your chosen asset.
  • Secondly, find a strike price that works for you. It is the level you think the asset would go, either higher or lower.
  • After predicting the movement, set an expiration time for your trade. This is the moment of truth for traders. When the timeframe is over, then the value of your trade will be determined.

 

How risky is binary options trading?

 

Good thing about binary options is you will know right away what risk you have before you trade. You will not lose more than what you pay since your trade is fully paid up front. This type of trading can be profitable too. Just like you know what risk you will have, you will also know your maximum possible reward every time you perform a trade.

 

Check Is ExpertOption real? For a broker recommendation.