How binary options work?


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Binary Options - is an option with two options for the outcome of trading: profit or loss. At the time of buying an option, the trader makes a forecast (in other words, a bet) how the asset price will change: whether it will fall or rise. If the forecast is correct, then the option will bring a profit, and if not, then, accordingly, a loss. A trading asset for an option can be various trading instruments: securities, commodities, stocks, currencies, etc. The time of a binary option contract can range from one minute to several months. The yield ranges from 70% to 95%. A similar trading method was invented quite recently, namely in 2008. In 2011, All traders were able to use this tool.

Currently, many brokers offering this tool voice the following advantages:

  1.  Ease of use (to make money, a trader only needs to make a forecast of how the asset will close in a certain time period);
  2. Absolute transparency of the transaction, which a trader can check by any available methods;
  3. Binary options can be applied to most of the assets that are on the stock market, so a trader can trade a stock that he knows using a binary option;
  4. Binary options make it possible to trade at any time of the day, five days a week. But the main point of binary options is luck. A person buys a binary option, succumbing to the desire to get "easy money", and bets on the price increase or decrease. If the price behaves according to the forecast, then the person receives money on the account. And if not, then it loses everything that it bet.

There are several variations of binary options.

  • Classic binary options.

Most popular among traders. This strategy involves opening a deal to increase or decrease in value. Then the trader waits for the expiration to complete. Basically, deals are opened for a period of 10 minutes to several hours.

  • Turbo options.

The main difference from classic binary options is the expiration time. Here it is 30 or 60 seconds. Using such a tool, a trader can open up to 60 deals per hour, but it is rather problematic to give an accurate forecast of how the price will behave on such a timeframe. Touching. There are two lines in this strategy: above and below. When making a purchase of this or that asset, the trader will make a profit only if the chart reaches this line.

  • In addition, there are options "Ladder", "Range" and others.

But they are used quite rarely and it will be difficult for a beginner who gets acquainted with options to understand them.

A binary options broker is an intermediary that provides buying / selling services. Due to the fact that a binary option is based on a forecast of an increase or decrease in prices, there are quite a few scammers on the market who provide these services. When choosing a broker, you must carefully study the licenses for its activities, ratings and reviews about the work. After that, the trader must replenish his account and you can start trading. The broker in the contract undertakes to pay the earned money to a bank account, card or electronic system.

The difference between binary options and ordinary

An ordinary classic option is an exchange-traded contract, which makes it possible to buy or sell securities at the price that will be established at the time of completion of the contract. It is provided by the majority in the market.

The operating principle of conventional options is quite simple. In the terms of the option, the asset is negotiated, the current value is fixed, the direction of the transaction and the deadline for the completion of the contract. The profit is not fixed, since it depends on what price the asset will have at the time of the completion of the transaction. To determine which trend will dominate the market in the future, traders use technical analysis tools.The organizer of options trading on FORTS is the Moscow Exchange.

The resulting profit from binary options can reach 75% -85%.

In order to receive income, it is enough for the value of the asset to move in the direction indicated by the trader by at least 1 point and at the time of expiration is in the positive zone of the contract. But at the same time, if the trader does not possess the skills of market analysis, then the binary option turns into a kind of bookmaker's bet, where it is impossible to predict the outcome of events in advance. The described examples show that binary options seem to be simpler and more comfortable to work with than using ordinary options. But at the same time, a trader can lose his funds without learning how to correctly predict the future trend. Thus, only a trader can choose which type of options to use.

Binary options are, at first glance, a simple, intuitive, accessible and profitable system, but it works on the "guess / wrong" principle. It should be noted that foreign regulators such as the American Commodity Futures Trading Commission and the Securities Commission warn financial market participants that binary options do not comply with market rules and mislead users by predicting huge returns. The reality is that most of the users lose their money in a short time. The same opinion is shared by the Israeli regulator Israel Securities Authority, which banned binary options in the country, and the French Authorité des Marchés Financiers (AMF), which blacklisted more than 270 sites providing services for trading binary options.

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