Binary Options – once again the basics

Published:16 October 2016 Updated:4 January 2024

Binary options can be referred to by many different names. In the currency markets, or interest rate markets, they are called digital options. In the U.S. stock market, they are called Fixed-Return Options (FROs) or “All-or-Nothing” options. They are called binary because they offer only two results: something (such as a $100 profit) or nothing. Typically, the following assets can be used for binary day options trading:

  • Currencies
  • Stock indices
  • Stocks
  • Goods (limited)

Binary options what is it

There are many types of binary options, but there are two main ones that day traders most often use:

  • Cash Or Nothing – a binary option that will pay a predetermined amount of money if the option is in a winning position, at the end of the term.
  • Asset Or Nothing – binary option – here the value of the underlying security is paid. This is why these options are called binary options. There are only two possible results of such investments.

Idea binary options trading is quite simple. The desire of the trader to open a trading position and then close it during the same trading day.

Note that all binary options contracts have expiration dates and times, which means that a standard binary options contract has a fixed expiration date if the platform the trader is using has an option expiration feature.

For day traders it is important to choose a broker binary options and expiration date, which terminates the trade within the same trading day, and once the trade becomes active from the given date and until expiration, the trader cannot manually close the position as is possible with other types of option trades.

The possible profit, when buying a binary option contract is already calculated and known to the trader, even before the transaction is completed. And because binary options can be exercised with almost any financial product, and in any direction (CALL or PUT), a trading day with binary options can be easy and profitable with a highly profitable result that is immediately payable.

In addition, the high income opportunity that binary options offer traders has several advantages:

  • Traders can set contract expiration times according to different strategies(more than 300 strategies for example).
  • Traders can manage their accounts without brokers. No intermediaries, which means lower costs.
  • Traders can trade different options at the same time.
  • Traders can make a small initial investment, providing an affordable form of trading day with limited risk. With one successful trade, previous losses can be bridged.
  • Traders have a constant opportunity to make a profit during the day. No unnecessary downtime.
  • Some traders see trading binary options as an exciting and interesting game.
  • The potential gain is high, and the turnaround can be extremely fast.
  • With the constant expansion in the binary options market, there is always a new opportunity for the trader to reap new benefits.
  • Due to personal involvement in trading this market, there is a high degree of innate security.
  • With the transparency of risk and short term in day trading binary options, market volatility is no longer an issue.
  • Savvy day traders follow trends and logic in the market. By following the principles, they can achieve increased profits without having to adjust their strategies. Nevertheless, if the trend does not work because of the short trading time, it is always possible to exit quickly and any losses can be minimized.

To trade binary options you can also use Forex brokersThe most popular are brokers such as: AMarketsForex Club, FBS, FxPro, Grand Capital and others.

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  • I just recently found out about this market and signed up for bimono, I quickly got convinced that you can make good money here, now I’m studying different strategies.

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