Binary Options Basics
Binary options are easy to understand. They're called 'binary' because there can be only two outcomes - win or lose. If your prediction is correct, you receive a payout that is determined at the start of the trade. If not, you just lose your initial stake.
You only need to make four decisions to execute a binary contract.
1. Choose the Underlying
The first thing to do is choose the asset you wish to trade, such as gold or oil, stocks or FX rates (The value of a binary option is derived from the price of the underlying asset). A big advantage of trading options is that you are not buying or selling the actual asset.
2. Choose the Duration of the Trade
Each binary option contract runs for a set time - with Binary.com you can choose a contract that runs between 10 seconds and 365 days.
3. Choose how you want to Trade the Market
Binary.com offers five ways to trade your chosen asset:
- Rise/Fall - where you can profit from the market rising or falling from its current level.
- Higher/Lower - where you can profit from the market ending higher or lower than a target price.
- Touch/No Touch - where you can profit from the market touching or not touching a target price.
- In/Out - where you can profit from the market staying inside, or going outside, two price targets.
4. Choose your Payout
With Binary.com you're in control of how much you can win. You specify a fixed payout amount at the outset, and your stake - what you pay - is then calculated. Binary.com offers payouts from $1 to $50,000.