This is a question that is frequently asked by the people that want to consider investing in this form of trading. Well, binary options, which are also referred to as all-or-nothing options or digital options are the options that pay fixed and pre-determined account depending on the happening or non-happening of an event at the time of expiry of the option.
As the name seems to suggest, options are involved in this trade. In the binary options, there are two outcomes and you must choose one of them. It is a prediction and either of the outcomes is possible. Just like the other traditional trading options, the binary options are primarily based on some underlying assets which may be commodities, stocks or currencies.
The binary options, as compared to some other forms of trading are simple. They are the best choice for those traders that want the potential of significant gains in the short-term with risk that is strictly limited. The trading on binary options involves the undertaking of some risks and it may thus not be suitable for all the people.You are advised to trade with the amount of money that you can comfortably afford to lose.
In the money option, the trader or investor can earn between 60 and 85%. In the out of money trade, you can lose all your investment. This is a fact that you need to know as you seek further answers or explanations about ‘what are binary options’. You need to devise proper strategies of trading depending on your needs, financial situation and objectives before you make any decision on whether or there is need of acquiring the binary options.
The form of trading is in some aspects similar to gambling and should be done carefully. It could turn out to be disastrous if it is unprofessionally done. You can very easily lose a lot of money. You are advised to make predications that are educated. In the trading, you will basically be guessing whether or not a particular trade will close at a price that is lower or higher than its original price at the time of expiry.