They are based on the options trading of securities conducted by large companies, banks, institutional investors and brokers who are daily transacting billions of dollars worth of options as a means of risk management and hedging.
The simplicity of binary options is, you have essentially a 50/50 chance of making the right decision (ie a yes/no proposition) and all you need to do is identify if the particular asset you are trading is will be going up or down in price.
The three basic types of options are high/low options where you predict whether the asset's price will end higher/lower as compared to the initial price; one-touch options that you decide will either go up or down; range/digital options where you determine which range the price will strike at.
"In the money" (ITM) refers to when the asset has a favorable strike price (price when the option is closed) relative to the current market price of the underlying asset.
For example, you would have an ITM call/buy option when you buy an asset below the current market price. Conversely, you would have an ITM put option when you sell the asset above the current market price. In both cases, you would be making a gain from the price differential (however other factors like cost of buying the option and fees would also need to be considered).
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At the time of the strike/expiration price, you need to make sure that the asset is on the "correct side" of the strike price in order to profit. The option is exercised when the stipulated time period - which can be as short as sixty seconds to as long as one month!
It's important to note that the outcome of a binary option will either be a gain or a loss. Traders will either receive a fixed amount profit payout if the option expires in the money or they will incur a loss if it expires out of the money.
The beauty of binary options, apart from the simple yes/no proposition, is that you can trade in a wide variety of assets ranging from currency pairs (forex), stock prices, cryptocurrency, gold, silver, oil, bonds, indices and also ETFs.
It is quite possible to generate consistent returns of 80-90% or even more from your investment, but the caveat is that you will need to test out the best strategies for you in order to have the best chance of trading successfully to win more and lose less.
That's why it's always a good idea to start trading using demo accounts in order to "test the waters" and make sure you don't lose any money at the outset.
We have narrowed down the 2 best binary options websites/platforms in the market where you can start trading instantly for free using demo accounts. Please be sure to thank us later on!
1. IQ Options
By far one of the largest platforms (if not the largest) for options trading, IQ Options has been active in the trading arena since 2014 having its registered office in St. Vincent and Grenadines.
Today, it has over 48 million users worldwide and hosts more than 1.3 million trades daily. The company also has 550 professional employees and operates a 24 hour call support centre available in 13 languages.
Apart from options trading, the platform also provides trading services for forex, CFDs and cryptocurrencies.
Click on the click below to register a free demo account and start trading for free:
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2. CloseOption
Another major options trading platform is CloseOption which was established in Georgia in 2013.
They currently have the widest availability of currency pair options (30) and also allow you to start real trading with a minimum amount of only $5 in your account.
Like IQ Option, CloseOption also has a dedicated 24 hours customer service operation and is also popular for running regular cash contests among members.
As a current promotion, the company is providing each new member $5 in real money to start trading and join their platform.
Click on the click below to register a free demo account and start trading for free:
In upcoming articles, we will be exploring binary options in more detail and write about the best strategies and methods to profit from options trading. Stay tuned!
Cheers,
Red
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