The kind of option wherein payoff is all or nothing is what they call binary options. Because of its one-of-a-kind characteristic, the binary options is very easy to trade and understand unlike any other traditional options. Binary option is cash settled, which means that they can be exercised in the expiration date. > Read more...
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Binary option is not an easy task. You must consider some essential tips in order to make your binary trade a successful one. In order to obtain, a good result you must start it slowly but surely and securely as well. > Read more...
What is Binary Options Trading?
Recently many traders are interested in the field of binary options although they do not know exactly what it is in this area and how you can make money from it easily.
Binary options also known as digital options are binary because there are only two possible outcomes- it pays fixed amount of cash if the option expires in-the-money while the asset-or-nothing pays the value of the underlying security. Also you may hear the name “call” “put” options.
binary options trading is divided into four main categories: commodities, currencies, indices and stocks. You can trade in those using several different time periods (60-second commercial, 15 minutes or different times you can determine for yourself. There is also a commercial types of one touch or trademark of Time). So you really can catch up financial news web sites, analyze them and make a nice financial gain.
Trading one touch is where you set a specific time and you set during that time the dollar Suppose not fall under tariff you set - if it falls below this tariff once then lost the 90% of your money indeed if he did not fall below You can earn up to 85% of the amount you invested. Of course you can do it also in the opposite direction of the trade.
Binary options trading is a relatively new field - one that still not many people know it, although traders who know the area know that you can make a lot of money in a very short time.
Growth Of Binary Option Trading Market
Binary options is a type of option in trading or investing to stock market with assets, liabilities, properties or funds where the payoff is both a fixed amount of a few asserts and none. The cash-or-nothing pays fixed amount of cash if the option expired or ends loaded while the asset-or-nothing is valued for security.
The all or nothing also called as digital options are commonly used in interest rate marketers and Forex and the fixed return is on American stock exchange. Before it was used only as a financial instrument which was traded over the counter and were traded by selected investors on future exchanges and individual traders could not purchase over the counter.
In recent years, this factor was change the world’s biggest fair play derivative clearing organization which is the options clearing corporation or OCC take the lead by procuring the binary option over the counter which provides traders, dealers, brokers and investors with access to different mode of trading. It was then followed by American Stock exchange that created binary option online trading and since then it has reach the success and market growth that helps customers or traders in having a financial security in their assets.
The popularity of binary options trading online becomes in demand and it has been used by many investors not only because of the fact that it provides different option or mode of trading but it also provides great convenience that allows customer, traders and investors to trade at the comfort of their home.
History of the Binary Option trading
The Binary option is one of the latest trend in the trading arena. In the past, the binary option was also referred to as exotic option. The outcome is fairly dependent on the performance of the underlying asset. Initially, they were traded at only few future exchanges. Investors, who wished to opt for binary options, needed to hire a broker. Usually, upfront payment was made to these brokers to make purchases.
The main rationale behind the Binary options was to create a simple and transparent mode of trade, which involved less speculations.
However, for years, the binary options did not even have any liquid market or any sort of regulations were even made. The first attempt at regulating the option transaction was made in 1973, when the Chicago Board Options Exchange was created, forming the basis of a regulated platform to trade options.
For years, the binary options existed only as an instrument, which was traded over the counter. In the past, binary options, or exotic options as they were often called, were traded by a select few on futures exchanges and individual investors could not buy them over the counter. The situation has since changed now. In the year 2008, the Options Clearing Corporation (world's largest equity derivative clearing organization) took the lead by enlisting the binary option trading over the counter. This gave the traders an access to this mode of trading.
The OCC already submitted a proposal to include the binary option trading mechanism on major market. In 2008, the SEC approved the proposal, thus legalizing the binary option trading.
This was soon followed by the American Stock who made the binary option trading online to the individuals. Since then, the binary options enjoyed tremendous success and growth. The online binary option in particular was a major in its popularity. Many brokers have jumped the bandwagon and now it has become easier for the individual to trade binary options, whilst comfortably sitting at home.
These online brokers offers the individual to setup their accounts online and take part in the binary options strategy trading activity. All you need is a WiFi connection to stay connected 24/7.
Advantages of the Binary Option Trading
In contrast to the other trading, the binary option trading makes it easier for the inexperienced to grasp the basics of trading. The conventional trading involves some kind of underlying asset against which the transaction is performed. In contrast, In binary option trading the traders do not own any underlying assets. It is just based on the performance of the asset, which is evaluated by the trader over a fixed duration.
Also, unlike the conventional trading, since the trading is performance based, the binary option trader can not liquidate or sell his position any time .
The parameters, such as the profit-loss percentage and the maturity, are decided at the outset of the trade and thus cannot be altered later once the purchase is made.
Moreover, the profit and loss involved in the binary option trading is not based on the volume of the magnitude of the securities. It only dependent on the direction in which the trading heads. For example if the pay off is set at 500$ against the value of a stock, which was purchased at 50$. then even if the stock price jumps from 50$ to 1000$, the trade will only receive 500$.
This is because the profit and loss in this kind of trading is dependent on the direction and not on the magnitude.
The binary option has another advantage when compared to the other conventional means of trading. The risk management is easier to handle. Binary options lets you decide the risk factor beforehand. Also, anyone can do this trading. A number of Binary options brokers offer online binary option trading, where new entrants can join in and open an account even with little amount of money. There is no underlying asset involved.
The binary option is not heavily regulated. With online support, virtually anyone can trade in binary options from anywhere around the globe.
Legal Status of Binary Option Trading
As mentioned earlier, the first regulations regarding the Binary Option Trading were first laid down in 1973 with formation of CBOE. Although, the binary option trading regulations were first conceived in the United States, but it was the Europe where the Binary options trading was popular and being traded for many years.
It is one of the most sought after trading mechanism in many different European Markets. One such market is the EUREX, which has been the forerunner to binary option trading for years. After gaining growth and popularity in European States, the binary options finally made its way to select US markets.
The main reason for its exponential growth are scale of economies, opportunity for everyone to participate in the binary options trading, the transactions in this trading being carried out on an hourly basis and a simple understanding. Even the inexperienced can benefit from the binary option trading. Many online brokers have sprung up offering complete help in setting up account with lowest initial investment.Binary Option Robots