Digital or binary options are the trading options where traders bet on one of the two things to be true. They use Call (up) or Put (down) options which represent "in-the-money" or "out-of-the-money" respectively.
Binary options have two outcomes, which may either be preset payoff of the invested money or nothing. The outcome depends on the predicted price of an asset within the given time. In plain words, this is merely a betting process where a trader predicts the value of an asset, commodity, currency-pair or stock index to reach a precise point. If the prediction ends in-the-money during the given time, he gets a preset payoff; otherwise, he loses even his own underlying investment.
Many people think that binary options are something like gambling. The vital thing about these options is that they give positive results when a trader has deep-rooted knowledge of the commodity, currency pair or asset in which he trades or predicts. It is not mere haphazard betting; it rather involves understanding, knowledge and analytical power of trader. If a trader exhibits these things, does not act whimsically, and uses the faculties of head and heart, he has improved chances to make money at this platform. The people, who simply bet, either by copying others or by hoping something good to happen, mostly lose here.
The specified prediction or betting time varies from company to company. The time limit of a prediction may end within a few minutes, hours or even days in some cases. Traders have the choice of betting in any commodity or asset where they like to invest.
Registered and legal stockbrokers provide binary options to their clients. A trader has to go to the website of a trustworthy trader, open an account and start trading there. Most of the binary options brokers offer a free trading amount of $20 to $1000 to the newcomers. This is to let them get a little bit of training over the website before investing their money.
Traders must learn the basic terms that they use again and again during the process of betting. The terms include the following:
1. Expiry time: It is the time when a Call or Put option will expire.
2. Strike price: It is the value that an asset may assume before the expiry time.
3. Present market price: it is that value of stock that a currency pair, stock index or commodity has at this moment.
4. Call and Put: When a trader expects the price to go above the strike price, he has to buy Call option, if not; he must buy Put option.
5. Payoff: It is the money that a trader needs to participate in a digital option.
2. Strike price: It is the value that an asset may assume before the expiry time.
3. Present market price: it is that value of stock that a currency pair, stock index or commodity has at this moment.
4. Call and Put: When a trader expects the price to go above the strike price, he has to buy Call option, if not; he must buy Put option.
5. Payoff: It is the money that a trader needs to participate in a digital option.
There are many binary options providing companies that are helping people to earn money through this process. Traders should be careful enough to get precise knowledge about what they are doing and how they work before physically taking part in the procedure.
BinaryOptionsFree site is offering free $100 binary options trading account. Visit the site for more information.
Article Source: http://EzineArticles.com/?expert=Elayne_Max
No comments:
Post a Comment