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How are Binary Options Traded?

Updated on February 25, 2013

What are Binary Options?

Binary options are traded in different ways. You can trade standard binary options where you predict whether the asset will go up or down by the set expiry. Some brokers offer “touch or no touch” options where you predict if the asset price will hit the line once by the set expiry. Yet others offer range options. This is where you predict whether the asset price will stay in the range or go outside of it by the set expiry. The “above or below” options, more commonly known as the “call or put” option is the most prevalent type today.

Unlike traditional investment tools, the rules of binary options are pretty simple, and potential profits are high without the added risk. Plus you can know your risk before you even place a trade (unlike forex trading). Thanks to these qualities, binary options trading has become the perfect investment instrument to make money for all types of traders – from absolute beginners to veterans.

The absolute simplicity of binary options trading option is the major appeal for traders. It is also the fact that trading can be conducted online from any computer that also adds to this appeal. A binary options broker such as OptionBit allows a person to do trading online and keep an eye on his trades.

Binary Options trading comes with some risk, just like most types of trading, this is why traders should consider investing in assets and trading types that will minimize these risks and will increase the possibilities of gains. This kind of trading options is better because you can know the calculated risks before trading as well as the profit that will be generated if it finishes in-the-money. There are brokers that allow a trader to get back a section of his traded money if the trade finishes out-of-the money. This is an added benefit. Other brokers do not offer this service.

Another positive side to binary options is that, when your stocks do expire out of the money, some brokers allow you various tools to postpone the expiry period. This gives you option to turn the loss into a gain. Some brokers call this “Roll Forward”, “Roll over” or “delayed expiry”. Another tool offered which helps you to guarantee your trade finishing in-the money is to finish the expiry time earlier if your asset is where you want it, ie. up when you’ve “called” and down when you’ve “put”. These options are available for a small price but prove to help great winning strategy.

Registering for an account with any binary trading broker is really easy. Typically, these companies will only require a trader to fill out an application form and provide a bank account which will be used to pay for the trading transactions.


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