What are Binary Options?

What are Binary Options?

Online trading has become a profession as well as a profitable pastime for many people across the world. The sheer number of binary option  platforms out there has made it easier for everyone to get into the trading game. These platforms offer a variety of trading methods, among which binary options trading leads the pack.

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Binary options trading, as the name suggests is a trading method where the trader can take one of the two available positions, equivalent to “yes” and “no”. This position usually involves the price of a stock or other tradable asset and has a time limitation. Originally conceptualized as a method for pricing tradable assets and derivatives, Binary option trading has become a full-fledged, stand-alone financial option where traders attempt to predict the market movement during a specified duration for a specified asset.

Binary options trading is one of the most preferred trading options due to its simplicity and potential payouts. Investors on binary options trading platform are required to open a trade for a certain amount and predict whether the price of a particular financial asset is going to go up or down during a specific time interval. The time interval can range between few seconds to months. If the prediction made by the trader comes true by the time the option expires, he stands to gain a pre-declared payout along with the amount used to open the trade. However, in the case of a wrong prediction, the trader stands to lose the investment made to open the trade.

Some people equate binary options with gambling due to the risks and guesswork involved. However, profitable binary trading is much more than just guessing, it involves educated, well-informed predictions about the price movement. Successful traders are known to consult various sources of information to understand the market trends and other influential factors before making the call.

In order to understand the whole process, it is advisable for new traders to go through the binary options guide and also practice on the demo accounts available on many trading platforms before opening actual binary options trades. It is also advisable for traders to first conduct a background search of any binary options trading platform before investing money in it. While there are plenty of legitimate platforms out there, each one has its own payout model. It always pays to find a reputed and preferably regulated platform that offers the best payouts in the industry.

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