Since several horror stories have recently been shared in various public media, more and more concerned investors are asking us about the legitimacy of investing in binary options. One of the biggest polarizing forms of investing out there is the trading of binary options. It is seen by certain investors as simpler or more friendly than the normal stock acquisition and selling. Others see it as a gaming mechanism that is very involved, and prone to rigged circumstances and other scams.
Different investors have different trading experiences with binary options, and whether it’s nice, poor, reliable, or risky, there’s definitely not a “right response. We created this article to help you make up your mind, and here you can find out what binary choices are.
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Trading in binary options is very distinct from shares, stocks, and mutual funds; they are also easy to understand. An investor does not invest in a company (i.e. Google, Apple, Microsoft, etc in this investment method; rather, they bet on market fluctuations in the cost of unique options. People who bet properly will win a predetermined amount of money; those who take the wrong move, well the outcome is clear, they lose every penny they’ve invested.
For eg, if your broker provides a profit of 91 percent and the USDEUR rate is 1.15562 and you position a “buy” of USD100 for a 1-minute expiry, and one minute later if the rate rises to 1.15563, you will get your invested USD100 back and then another USD91.00. The investor will recover his or her investment and a bonus on top if the prediction is accurate. If they are incorrect, the investor loses the entire sum put into the scheme. It is an enticing investment strategy because, compared to FOREX, investors get the outcome faster and it needs less skills.
Types of Binary Options: A Comprehensive Guide
There was only one form of trade that you could take, called High/Low, or Up/Down, or Call/Put, in the beginning. These choices are all the same thing. Nowadays however, binary options give investors more flexibility. Traders can now tailor their investments according to their requirements. When opposed to conventional alternatives, this is advantageous. Using this versatility, brokers of binary options are introducing a few brand new sets of derivative products that deliver outstanding growth. An summary of these different types of binary options and how they operate is given below.
High/Low trade: High/Low traders are often known as investors in Up/Down, or Call/Put. This is the most simple sort of exchange in binary options. Investors purchase a binary call option for the popular high-low binary option if they expect that the cost of the underlying asset will increase above the current market cost or if the investor decides that the underlying asset price will fall, then they will purchase a binary put option. The investor will earn a reward if the presumption is correct. Otherwise the primary investment is wasted by him/her. High/Low trades, ranging from 60 seconds to a few days or even longer, have both short and long expiry periods.
Here is an example of a High/Low trade:
You think that by the end of the trading period, the cost of silver will rise, so you look up silver on your trading platform. You see a high/low exchange open at the end of the trading day with an expiry period of a few hours. Based on your trading methods and experience, assuming that the silver price would certainly rise above its current price, you chose to join High/Low trade and selected “High” or “Up” as the trade path. The cost of silver rises after waiting for a few hours, your forecast was right on, and you will earn a payout. Congratulations!
This is another form of trade that is very popular, consisting of three types of touch options. Touch, no touch, and double touch are these.
An investor who bets on binary touch options is confident that a particular option’s price will rise to or above a specific level. No Contact is a simple variation in which the trigger point within the expiry period will not be reached by the investor bet price. Since the trigger point rests in one direction or another, these trades are directional, but they are also more accurate than high/low trades. They are willing to receive larger payouts. On the other side, two separate bets are made on two separate positions by an investor who bets on double touch options. If either of these conditions is fulfilled, such an investor gains capital.
The choice for touch trading is very distinct from high/low trading. He/she places a trigger point when an investor opts-in for a touch option, which can be found anywhere on the chart. In general, the further away the trigger point is from the asset’s current expense, the risk of receiving higher payouts increases. A point that is put near the current price, which is easier to achieve, provides a lower return since the risk is lower.
Here is an example of Touch Options:
You assume that in the next few hours, the stock of Facebook will increase. Until falling back down, you are confident it will hit a specific cost. On the Facebook stock, you put a One Touch trade, betting it will touch the price within the next few hours. After 1 hour, because the option has not yet expired, you see your assumption was right, it affects the price you described, and you make money.
Sixty Second Binary Options:
In general, sixty-second binary options are the same as high/low trading. An honest question could arise, however, is that if they are comparable, then why are they set aside?
Ok the explanation is that it’s a particular form of trade in high/low binary options that takes place within a very short time frame. Each 60 second exchange, as the name implies, lasts for a single minute before closing. The skills required for sixty-second trading options to be successful are very special. There are various problems presented by quick trading that investors do not have to contend with when trading for longer periods.
Here is an example of Sixty Second Binary Options: in real-time, you are searching the gold map, and your intuition says that in the next 60 seconds, the gold price is about to increase. You have with you your trading platform and you browse the gold section, you see a sixty-second option available that expires in a minute. You put your desired amount you want to exchange without wasting a second, now the trade process has been successfully initiated, and you have to wait 1 minute for the result. Your prediction came true after sixty seconds, and you won 60 seconds later.
Boundary options: Two price levels are provided by boundary options, as the name suggests; the upper and lower levels and both are decided by the investor. The price range can be small (i.e. $11.20 to $11.30) or wide (i.e. $11.00 to $20.00). The role of investors is to presume whether the cost level of the assets of your choice will stay within or go beyond the specified range. The investor also has to pick the expiry time. The longer the expiry period, the narrower the boundary is. An investor gains in this trading phase when options actually stay within the given price range for a predetermined time.
Here is an example of Boundary Options: Let’s take an example of the USD/EUR currency pair. That is 0.7115 and the market is volatile right now. The investor assumes, therefore that the price would not remain in a specific range. Let us have a lower level at 0.7100, a higher level at 0.7128, while 48 hours is the expiry time. If the price of the USD/EUR currency pair is below 0.7100 or rises more than 0.7128 in 48 hours, then the money will be closed for trading.