What Are Binary Options?

A Binary Option is a simple financial contract that offers a ‘fixed ‘all or nothing’ outcome at a set expiry time. A predefined payout is made if a prior outcome is correctly predicted at the time of the contract expiry. It the outcome is not correctly forecast then the contract expires worthless.

All the trader has to do is select the asset, the contract duration and the direction that they expect the price to move. They then decide how much they wish to wager on the outcome.
The ‘all or nothing’ nature of binaries is from where these contracts get their name. They are high risk but also offer the potential to earn high rewards. Typically an ‘in the money’ contract will payout a return of 70% plus and in many instances more.

A key attraction of binaries is that they offer a predefined level of return and liability. This is why they hold such appeal. They are a non leveraged product so you know exactly where you stand when dealing with these contracts. The potential profit and liability on each contract is known up front. This means you know exactly what you stand to win and the limit of your liability if things don’t work out as expected.

This not only provides complete transparency on each transaction, it also makes them a very simple financial product to understand.

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Get Started With Binary Options

1 Open an account

To start trading you will need an account with a broker. Account opening is both quick and easy. You don’t need large amounts of capital to get started with many brokers accepting minimum deposits from as little as $100.

2 Pick an asset

As binaries don’t involve a direct investment in the asset traded they can be offered on virtually anything.  As a result you will find a wide range of binary contracts a allowing you to trade Indices, Forex, Commodities and major global Stocks such as Amazon, BMW, Coca Cola, Google and Nike.

3 Decide On the Direction

Once you have picked an asset it is then a case of deciding if the price will end HIGHER or LOWER at expiry. Contracts can be set to expire in seconds, hourly or over several days or weeks.

4 Set Your Stake

The final part of setting up your contract is to decide how much you want to risk. Contracts can be placed from as little as $10 right up to several thousand dollars. What you wager is your fixed liability. You can’t lose more than you stake on the contract at the outset.

5 Place Your Trade

That’s it. Every thing is set up. You now just need to pull the trigger to place the trade in your account.

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