Why You Should Trade Binary Options

| August 18, 2013

Binary options present traders with a simpler alternative to traditional options investing. With defined parameters, binary options enable traders to capitalize on a forecast outcome to a fixed extent, in the event the trade closes ?inthemoney,? i.e. in profitable territory. Where the trade fails, the binary option is lost, and its cost forfeited. This provides traders with a degree of certainty over the potential outcomes of their trade, which can make it easier to plan for different eventualities in the markets. But with such a severe black-and-white construction, are binary options really a worthwhile basis for trading your capital?

Binary options are instruments that enable traders to settle for assets or for cash in favorable circumstances on maturity. Essentially, an option is a right to trade a specific market at a specific level on maturity ? if it is advantageous to do so, the trader can exercise the option to their financial benefit, either for the asset concerned or for the cash equivalent. Binary options go one step further, pegging the results at certain pre-specified levels. This has the effect of neutralizing the price curve, and creating a flat win/lose proposition for traders.

 

Binary options

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This has an obvious advantage. Before any binary options trade begins, you can know with certainty how much you will earn and how much you can lose. When trading other instruments, including straight options, there is no clarity on the amount of money you can earn and lose from the trade. In some types of trading, losses are theoretically unlimited, and traders who are not careful can often feel the force of demands for payment from their brokers.

With binary options, the parameters are defined at the outset of the trade, which enables more effective planning for the trader. Further, when markets are moving only slightly in your favor, you still capitalize to the fullest possible extent from the trade ? leaving a margin for error on the win side.

Binary options are traded against a specified time frame, and this can be as little as just one hour. In practice, this means traders are staking against the market rising (or falling) beyond a certain price point over the next hour. If the position is ?inthemoney? when the hour is up, the trader is rewarded with a win. Similarly, if it closes down, the trader will lose. Binary brokers have introduced ways to soften this effect on the downside, the most notable of which is the safety net percentage now commonly offered against losing binary trades.

market rising

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Sites like Bonusbinaryoptions.net can help you get the most out of the trades you make. In the strictest sense, a binary option should be traded between 0 and 100. The market is quoted at a certain percentage, and is made up or down as relevant to determine the gain (or loss) the trader will experience when the option matures. But it is now common for brokers to offer a safety net of between 10% and 15%, which provides for some money back on trades that have gone wrong. This can help soften the blow of a losing trade.

Why You Should Trade Binary Options

Category: Finances

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