The basic guide to Binary Operations
In the basic level, a binary option is called by many other names like the Digital Options, FROs or the Fixed Return Options, all or nothing options and many more. The best part about this Binary Options trading is that no matter what your trading experience is, a novice or a seasoned trader, you can very well understand the trade basics and try your hand at it.
The basic thing that one does in any Binary Options trading is quite different from forex or any other trade platform. Here, instead of actually buying stocks, is it the index currency or the foreign one, the trader only lets out a prediction on the probable movement of the stocks in a desired period. As the name itself suggests, in binary trading there are just two possible results, either the concerned stock values up after the completion of the period chosen or the value of the stock goes down. Now, the best part is that without actually being bothered about the prices of the stocks, by just making a correct guess you entail profits!
Outline of what you actually do while Binary trading:
- Choice of the asset: the first thing to do in any binary options trade is to select the stock. There are scores of options to choose from and all major world currencies are included in the trade catalogue. Doing this step with care is important as it determines all subsequent steps.
- Deciding to call or put the stock you choose: This is the main part of the trade where the involved trader actually puts his or her prediction into action. If you think that the stock you chose as the asset is likely to increase in its face value after the elapse of the defined expiry period, click on Call or if you think that the value of the asset stock is going to fall from its current state in the time to day and at the end of the defined expiry time, click on Put.
- Be patient: the next thing is to wait and see what the final results are after the expiry period has elapsed. You can check you status using live graphs all this while.
- Hurray! Collect your incurred revenue: the last thing left now is for you to visit your trader profile and check the results. If your prediction is correct, time to collect your profit and is not, there is always a next time.
Status of Binary Options trading in the world wide financial markets
One thing that is unique about Binary Options is that is lies in two different categories of financial trading when viewed from different perspectives. What we mean by this is that while considering it on a general level, binary options can be safely called Exotic options for the obvious fact that the underlying calculations are pretty sophisticated. The same trading when viewed from a financial angle becomes a digital option because they are very easy to comprehend and in fact easier to trade with!
In the financial markets the general way of trading such stocks is the OTC or the over-the-counter trading. However, for the Interest markets and Forex, trading in Digital options is very common. FROs are an active part of many stock exchanges all over the world and figures say that CBOE and AMEX both have such options for S&P500, VIX etc.
The various Pros:
- Less risk factor
- The simplicity in the process
- It is highly lucrative for traders
- Gives you a chance to hedge
- Multiple time frames make the trade very convenient