Binary options: Modern way to trade online
Binary options are a lot easier to understand than traditional trading and are a completely new way to trade online. If you understand the concept of binary options trading well, you can easily make a good amount of money based on accurate market predictions. The binary options are cash dependent and all transactions in binary options are cash settled. They allow you to trade in markets from around the world and one can trade even currencies via binary options. To get a detailed idea about binary options, have a look below:
Two outcome platform:
The first thing you must know is that binary platform is two outcomes based platform. Traders dealing in binary option require predicting the exact pattern direction of a stock’s price movement. Unlike traditional stocks, there is no need for knowing the direction of price movement along with magnitude in binary options. Investors in binary option only require having an opinion about stock and its price movement in order to place a trade. The opinions on stocks price movement can be either price will go up or fall down.
Make your decision:
It is necessary for you to make a decision for the stock you are willing to invest before its expiry. The short term trading stocks only last for an hour or less. If you are positive that price of a stock will go up then you can step ahead and buy the stock at current market price. Otherwise, if you think the stock will lose its price value and its prices may fall in future then you can sell the stock. If your predictions are proven correct on time of expiry then you will get paid instantly as per the contract value in binary stock option.
Learn facts about price:
The price of a stock in binary options is determined based on the possibility of a particular event to occur. For ex: consider if a current value of a stock is $100 and its last trade was done for $95 then the probability of an event to occur is high where prices of stock go up. Therefore by learning the price of a stock based on its last trade patterns gives you a fair amount of advantage to claim success in winning your predictions.
How binary options trading is beneficial than traditional options?
Binary options trading is much simpler platform and much easier to understand. Investors in binary option only require thinking about the price movement of a stock without any need for magnitude consideration. Traditional options, on the other hand, require predicting stocks price movement, magnitude and also there is no time for expiration which makes it difficult. The other major benefit for the binary option is that it has controlled risks involved. The risk-reward ratio in binary options is also pre-determined. Whereas in traditional options there are not available any boundaries and therefore gain and loss of a person are also limitless. There are available short term contracts in binary options which open and close multiple times in a day. This makes it easier for investors to invest at their will at any particular time of the day.