Binary options trading is a relatively new style of trading whose growing popularity has taken everyone by surprise. This new style of trading is attracting a lot of traders who find this a fast way of making money.
What are binary options
Binary options has a digital trading mechanism. It means that you have only two options to select from, hence the name binary. In binary options trading you do not actually buy the stocks but make a prediction about the price level of the asset. If your prediction is correct, you can make up to 92% of the amount invested but if you lose, the entire amount invested will be lost.
How is binary options trading different that regular trading?
Binary options are very different from regular trading even though both are kinds of trading itself. Binary options trading is short term trading. In regular trading the expiry time may be in terms of months or even years but when it comes to binary options trading the expiry time is generally less than one day. It can be as small as 60 seconds. In fact some binary options broker also offer 30 seconds expiry time.
The potential of making money is much higher in binary options trading as compared to regular trading. You can nearly double your investment in just 60 seconds (or even in 30 seconds). The high profit potential comes at the cost of high risk factor. If your prediction is wrong you can lose all the amount invested in in just a minute.
Binary options trading types
In binary options there are different types of trading but irrespective of the type, all the trading types have only two options to select from.
High/Low: In High/Low trading type you have to predict if the price level of an asset will end higher or lower than the current price level after the end of expiry time. The expiry time in this kind of trading is generally from 5 minutes to one day.
Touch/No Touch: In Touch/No Touch type of trading you need to predict if the price level of an asset will touch a predefined price level within a specific period of time or not.
Boundary: In boundary trading your binary options broker will specify an upper limit and a lower price level limit. You have to predict if the price level of the asset will stay within the boundaries specified or it will go beyond the boundaries.
60 seconds: This was the fastest binary options trading type before some binary options introduced 30 seconds trading. But 60 seconds is the most popular when it comes to trading with extremely small expiry time. In 60 seconds trading, you have to predict if the price level of an asset will be lower or higher that the current level after exactly one minute.
Options builder: Options builder is an advanced type of trading in which you can select the risk factor yourself. The potential profit varies correspondingly.
Binary options trading is arguably the most exciting form of trading and more and more traders are jumping into this business. If you feel that you can make money by trading in the binary options market, you should go ahead and give it a try.