A Quick Guide to Binary Trading
Although binary trading sounds confusing, it’s actually one of the easiest trading options to understand. If you have a good knowledge of an asset’s value, it’s also a quick way to make a potential profit.
The idea behind binary trading is very simple. You need to decide if you believe the value of an asset will be above a certain price by a certain time. If you think it will, you purchase a call. On the other hand, if you think it won’t, you purchase a put. Every option has a strike price. If you’re on the correct side of the strike price after time expires, you get a fixed return. However, if the value of the asset is on the other side of the strike price, you lose your investment.
For example, let’s say you have an asset with a bid of $50 and an offer of $60, and the question is whether the asset will be above $1,000 by 2 p.m. today. If you think it won’t, you can sell for $50 right then. If the option expires at 2 p.m. above $1,000, it’s worth $100. If you purchased a call and were right, you make a profit of $100 – $60 = $40. However, if you’re wrong, you lose your $60 investment.
Read on to learn more about binary trading and see if it’s a trading option you’d be interested in exploring more. While binary trading is quick and simple, you need a thorough understanding of your market for the best chance of success.
