The basic working of binary options is that the investor predicts if the value of an underlying asset would increase in price or decrease. The time period for which the prediction is valid would be termed as the period of the contract. The term in-the-money is used to indicate a right prediction, while out-of-money indicates a failed speculation bid. The procedure reads simple and that is quite what it is. There is however some learning to be done to find out the statistics on how the asset has been moving in the past and therefore be able to predict more correctly the future, even though it can be for a very short period of time.
Why opt for Binary Options?
In short, Binary Options can be explained as one of the most exciting form of investment or speculation or trading methods that is available today. It offers very high return on investment commonly known as ROI. It provides very fast returns and most times the return is high. There is the factor of high risk naturally, but then there are many who love this sort of risk factor. However, there also are options where the risk taken is not so great. The system has a process where one can also get some returns on a failed speculation. That amount would not be the total investment but some part of it. A total loss can therefore be avoided.
What is Fixed Return Options?
Binary options have many a variety in them, the simplest one being the Fixed Return Options. In this form, the trader would receive about 60 to 70 percent of the invested amount in case of an in-the-money scenario. There is the advantage that in case of an out-of-money scenario the trader would still get back anywhere between 5 to 15 percent of the invested amount. This is the simplest and assured form wherein the trader does not lose out on the entire sum invested. So, there is a sort of insurance factor here.
The Forex Binary Options
Forex Binary Options is another form of binary options trading. In this case there is one advantage of availability of lots of charted data for analysing the asset. News about unemployment or such other similar issues helps one a lot in analyzing the data and predicting in the forex market using binary options. It is to be noted that there are quite many factors based on which forex trading depends. Some extensive reading is therefore necessary
The term digital options is also used quite interchangeably with binary options as the transaction is mostly in electronic form – using the internet. In short, binary options is a digital process as it is conducted only over the net unlike the other stock market trading processes that we are well aware of.
Whatever the method one uses for binary options trading, the end fact remains the same – it is exciting, interesting and when carefully used it is profit making.