What is Binary Trading?

June 2, 2015 by in category Articles tagged as , , with 0 and 0
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Binary trading involves buying or selling of financial assets on an online broker platform. Two outcomes are expected in this kind of trade. One of the outcomes is being in the money while the other is being out the money. These outcomes are realized when the trader correctly puts or calls the asset in question. As a trader, you need to be aware of the risks and the rewards which are often misunderstood. Binary options depending on the broker have different payouts, risks, liquidity structure and fees.

With binary option, the trader is in a position to make profit from a fixed payoff or lose the investment. In this kind of trade, the profit you make is a lot and in a short time. Even though you will make good amounts of money in profits, you need to be aware of the risk you’re subjecting your investment. While at it, you should not put all your investment on the table for a single asset.

When you get into binary trading, you need to be keen on the trading as it is not an easy venture to get into blindly. You will find that most brokers have a disclaimer warning that you are getting into a risky venture. This trade is simply an all or nothing kind of venture. If your put or call move is wrong, you might end up losing the initial investment amount to the trade if the broker does not offer a rebate option.

How to implement a trade in binary options

The broker might differ from one another but you end to realize that the trading interface is the same.

  1. Your first move when trading is to select the asset you wish to trade.
  2. The next thing will be to choose the direction you think the asset will take. This can be up (call) or down (put).
  3. You need to choose the timeframe you wish your trade to expire. This can be in 60 seconds, 30 minutes or one hour; all these timeframes are offered by your broker.
  4. The next move will be to decide the amount of money you wish to lose. Some brokers will allow up to as little as $1 like IQ Option. As a newbie, it would be wise for you to start off with the least allowed investment.
  5. After all this, hit the trade button to execute your trade and wait for the time to elapse for your trade to expire.
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Types of binary options available

When trading binary options, you will come across three kinds of binary options. The first one is the call/put kind of trade. When trading on this one, you will simply be predicting the direction a price of a commodity will take; call (up) or put (down).

The other kind of trade would be the touch trade. In this, you are offered with a target price at the start of the trade. In case your asset hits the target price or goes beyond the price, your investment will be considered a winner. This target price is given by the broker at the time of trade execution.

The last kind of trade in binary options is the boundary trade. With this kind of trade, the broker gives you the choice on different prices and it will be up to you to determine if the prices of your asset of choice will have their prices within or outside the price range offered.

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Binary Options trading involves high risks which may not be suitable for every person. Never invest money which you can’t afford to lose and make sure you familiarise yourself with the basics of binary options before you start. MrBinary.co.uk is not responsible for any losses, as all our pages should be used for informational purposes only.

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