- what is a binary option
Option Trading TutorialSIMPLE. QUICK. PROFITABLE.
Binary Options, also known as Digital Options, all-or-nothing options, or Fixed Return Options (FROs), have been available since the middle of 2008 and are simple for any trader - novice or expert- to understand.
The Binary Option is in essence nothing more than a prediction on which way the price of a stock, commodity, index or foreign currency will move by a designated expiration time. You never purchase or own the asset as you’re only predicting the direction that the asset will go. There are only two possible outcomes and the price of the asset does not matter. As far as you’re concerned, all that matters is if your prediction was correct or incorrect.
Through the TraderXP platform, you simply:
1. Choose the asset you want to trade
3. Wait for outcome
4. Collect your profit
Binary options fall under the umbrella of exotic options but within financial markets they are often referred to as digital options. While digital options are very simple to understand and easily traded, the calculations behind the pricing is sophisticated and so they are considered exotic options.
Digital options are usually traded OTC (over the counter) across all assets in financial markets but more commonly used within the Forex and Interest markets. Recently numerous stock exchanges have produced listed digital options on selected stocks, commonly known as FRO (fixed return options). Today the CBOE offers fixed return options on S&P500 and VIX, also 20 stocks were listed on the AMEX in 2008.
Advantages of Trading With TraderXP
Controlled Risk – The percentage reward is known from the onset, as is what you stand to lose.
Simplicity – You only need a sense of direction i.e. ‘Will Google stock price increase/decrease by expiry?’
Attractiveness - For a profitable trade to take place there is only the need for the price to close in-the-money and the winning trade will receive the entire payoff, even if was ‘right’ by a single pip.
Hedging opportunities – A safer option to take if a trader has an open position elsewhere in currency, stocks etc. Utilizing a binary option can eliminate a further loss elsewhere.
Punctuality – Binary contracts are being issued around the clock, allowing traders to trade on multiple time frames. There is always an expiration time arriving, which constantly yields new opportunities for binary traders.
Option Trading Tutorial – TraderXP provides you with everything you need to learn to trade. Taking into consideration that there are many binary options trading strategies available on the market we suggest trying several different options trading strategies before committing to one. Learn to trade correctly with one of our tutorials and trade options with success.
To start trading today, click here to open an Account
- Binary Options
- One Touch
Choose from our wide variety of assets.
Simply press the “CALL” button if you believe that the value will exceed the listed price at expiration, or press the “PUT” button if you feel that the value will decline below the listed price at expiration.
Insert your initial investment sum and press the "Apply" button.
Make the chosen profit on your investment.