Fundamentals of binary options trading
We are all familiar with the basics of the trade - a merchant market research and buy an asset at a specified price with the expectation that its price will rise and will sell the asset with the new higher price and profit the difference.
In binary options trading, but this is different. Yes, the dealer, also known as the buyer, will be in the market itself will decipher how he thinks the market will move, but the result and the method of profit is somewhat different.
Here the differences are clearly explained:
Traditional trade: there are a multitude of possible outcomes, none of which are known in the purchase of assets
Trading binary options: there are only three possible outcomes - or active expires in the money, outside money-or the money. The three results are known in the purchase of the option and therefore all potential risks can be taken into account.
Traditional trade: the gain or loss depends on the extent of the price rise / fall of such assets if 200 shares was $ 10 each, the amount of gain or loss is totally dependent on the amount of the price asset increases or falls
Binary options trading: only the direction of movement is important and not the magnitude. Therefore, if a buyer makes a purchase option of $ 2,000 on an underlying asset with a return rate of 71%, known from the beginning that if the option expires in the money, then he will receive $ 3,420 and if it expires outside the-money, then you will be reimbursed 15% of $ 300.
This is because all the results of a binary options trading are known from the beginning of the contract. This reduces the risk factor and also limits the knowledge that a purchase must be before a purchase option.
Traditional trade: the trader owns the asset
The binary options trading: the buyer is trading on the performance of an asset
Traditional trade: the trader will have a profound knowledge of the market and the asset to be negotiated
Binary option trading: a buyer only needs to have a sense of the direction in which the asset is likely to move in as it is trading on the performance of an asset, rather than the magnitude of the change in prices
Traditional business: the asset can always sell it to the merchant suits
Trading binary options: time to buy the contract, the buyer can choose between different maturities - end of the hour, day, week or month. Once your expiration time is selected the option to purchase is, it can not be altered or waived.
Binary options trading is a very unique method of investment and creates an exciting new offer for those who want to control their investment risks.