What are binary options?
Binary Options is a relatively new form of investment in which an investor – trader – can “put” on whether investment funds show a specific price movements, whether or not they show, and then receive payment depending on whether the movement of the measure was intended correctly or not. The term “binary options” means “two options”. Trader at any time have two options here, from which it can choose. The binary options definition are called for in many ways. They are also known as digital options, and because profits from orders are determined before it is implemented and can not be changed, they are also known as “fixed income options” or “forex options”. Binary options are also called the options “all or nothing” because of the nature of the payments: the request is successful and trader wins it all or commission ends in failure and the trader did not win.
Price bet on the binary option is given as a ratio with a value between 0 and 100. If you wagered event takes place, the plant ends up at 100, and if it does not happen – the plant ends up at 0.
Binary options broker will give you your stake for the event, and if a player finds that this event will take place – will buy the plant. If, however, he believes that the event will not take place – sale of the plant.
The best explanation is giving one of the simplest forms of binary betting – the establishment of “up and down”.
Imagine the following situation: it is 15:30 and the FTSE currently has a value of 5400. Exchange ended the previous day work noting the index at the level of 5425, and the broker we use binary option I give “The FTSE is Finish Up” (“FTSE finishes the day above the level of the previous day “) with the price of 24-26.
In our opinion, the FTSE starts to grow closer to the time of completion of the job fair, which is why we decide to buy a binary option “FTSE to finish up” costs GBP 20 per percentage point at a specified price of 26. In this case, it turned out that our prediction was correct and the FTSE ended the day with the listing 5450, so win 1480 GBP (100-26) = 74 x20.
If only the FTSE would end the day with a quotation higher than the previous ones, this plant would be settled based on the value of 100, but if you have ended with lower listing – the plant would be set to 0. In this situation, if the said index does not exceed the previous value after work on the stock exchange – have lost 520 GBP. This is calculated by multiplying the price of 26 by a rate that is 20 GBP.
Before obstawimy any option, we will know the exact maximum amount you can lose – in this example, it amounted to 520 GBP.
There are many other types of binary bets, in each case, the rules are the same: ask a question to which the answer may be correct or incorrect.
Binary Option Type One Touch refers to whether a given index exceeds a set price before expiry of the order. If the index exceeds the price – the value of the plant will be set at 100, and if not – it will be fixed at 0.
Ladder-type binary option based on whether the index will end the period of orders above a specific level. For example, the plant “Wall Street above the level of 12200 points” will be resolved in 100 if the index finishes above said level or 0 if it is completed it below that level.
Target type of binary option based on whether the index finished trading period of the price range. For example, the plant “Wall Street has reached 20-40” will be resolved in 100 when the index finished trading at between the two numbers or 0 if it does not complete the work within that range.
This type of plant binary simply based on whether the maximum or minimum value of the index for that day is in a predetermined distance from the maximum or minimum value of the previous day.
Department of binary type Tunnel check whether the index will remain between the limit values specified before buying the plant. Plant Tunnel type may be based, for example. On whether the FTSE will remain between the values +50 and -50 in the day. If the index would reach any of these levels, the bet would be settled at 0, and if not achieve any of these values - would be resolved at the level of 100.
Contracts for binary options are unique and have some characteristics that distinguish them from other financial instruments. Traders can trade investment funds in different classes, always being aware of the validity period. Trader is also faced in a position where he knows exactly how much data the order will it cost and how many will gain or lose depending on the outcome of the order.
These are the main reasons why you should trade binary options. Binary options are available for individual customers in the same year in which conventional markets crashed as a result of the crisis on the US market for subprime mortgages – given to, among others, people who in the past had problems with repayment of loans. Here are some of the reasons why access to these options:
a) Reduced risks associated with trafficking
On the traditional financial market players have to deal with many factors which have to be met. Financial leverage (leverage), the margin payments, inheritances, problems with poor quality of Internet connection, as well as unscrupulous practices by some brokers. All this may affect the results of trading, which makes trading the foreign exchange market (forex) and commodities trading are among the most marked by risk forms of investment.
Binary Option are deprived of some of these factors. There is no re-quotes, no inheritance, as well as requirements related to the use of leverage or having a balance of the security declines in value of the order. There is also a summons to replenish the deposit held.
b) More choice means to trade
Some binary options brokers offer up to 90 funds. These 90 different measures may present the opportunity to make money at any time. If it is somewhere mentioned that the market will be characterized by a large increase, we certainly have a better chance of success in the case of binary options.
c) Reduced cost of trade
If you live in the US and you trade the forex market, the new guidelines Commodities and Futures Trading Commission (CFTC) will require you to open an account with a balance of at least USD 25 000 for the purpose of trading in the forex market, and even more – with options trading. In the case of binary options, you can start a game on the market having been allocated only $ 100. No need to pledge to trade binary OPTIONS.
d) Better payment
As a percentage of profits available for traders on the market are higher binary options than anywhere else. Profits are 70% to 90% for ordinary jobs and up to 500% in the case of speculation on orders of high profitability. Orders for shorter periods of validity may create an opportunity to earn money even higher.
What are traded binary options on the market?
The market binary options traded securities from many different classes:
Stock market indices
Currencies are the most popular means existing in trading binary options market. They are traded 24 hours a day and reflects them all day period of activity. Many currencies, including major currency pairs and cross rates of the Japanese yen are common in the trade. Listed below are the indices that are commonly found in trade:
Dow Jones (USA)
S & P500 (USA)
Xetra DAX (Germany)
FTSE100 (United Kingdom)
Zurich SMI (Switzerland)
TADWUL (Saudi Arabia)
Strait Times (Singapore)
SSE180 (Shanghai, China)
25 Tel Aviv (Israel)
The Nikkei 255 (Japan)
Hang Seng (Hong Kong)
Apart from them, there are also other indexes, but those listed above are the most popular binary options trading platforms. Overall, the indices are available only for a few hours a day when the major indexes are open during working hours Stock Exchange.
Raw materials typically do not have good representation on the binary options market. But almost always mentioned gold, silver and oil. Each subsequent material is a bonus for the trader. Commodities may be traded only if their main markets are performing on the floor of the Chicago Board of Trade (CBOT).
Actions really should be listed in second place on the list, because of the huge number of shares that occur in trade. The exact list of actions will vary for each broker, but popular actions related to technology, such as those from Apple, Microsoft, Google and Facebook are a common sight here.
Binary options brokers
When it comes to buying binary options, on top of all brokers is Topoption. Their trading interface is very simple to use and offers a clear view of the plant binary position, at any time.