Binary option – why you must know what it is!

 

The need to learn the basic is imminent for everything:

When it is finance and money that one is talking about, it is extremely important that the basic is very strong. It takes hardly any time for a misinformed person to be taken for a ride. On the contrary, a person with a strong foundation in knowledge is one who will come across as someone difficult to be duped.

Everyone nowadays is talking about binary options:

Today more than half the workforce is preoccupied with a freelancing job that is able t provide them with a supplementary income. Let’s face the fact, in times of inflation, even a little extra helps.

What is this binary option that everyone is talking about?

A binary option is a derivative financial product that makes a fixed payout to the trader if the trader wins a trade. But on the other hand, if the trader loses the trade, he will lose the entire amount of the trade.

In the trading parlance, there are only two options that are available for trading in the nature of a “yes” and/or a “no”.

They are:

  • If the option expires in the money and
  • If the option expires out of the money

Since there are only two choices that are left open to him, the trading is called trading in Binary Options.

Time is an important constituent of trading I binary options:

There is an expiry time for every trade that the trader undertakes. It is important that the price of the underlying asset on which the trade stakes his claim is on the right side of the strike price. Only then the trader wins that trade and clocks in profit to the extent of the website’s payout percentage.

If the strike price is different from the actual price of the derivative and the time expires, the trader will lose the money to the extent of his trade value. He cannot claim anything out of it.

the credit and the debit happen automatically on the website chart so the trader does not have to worry about all that. he only needs to analyze previous charts to determine how the derivative would behave.

The trade derivative can either go up or down:

There are only two ways that a trading derivative can behave. At the time of the strike, it can either rise up or fall down. Whichever value is the closest to the trader’s value will be taken to his strike.

Using a binary robot:

Apart from manual trading, a robot can also be used for trading. the trader can set his account on the autopilot mode and allow the robot to do trading on his behalf. The trader can exercise control over the robot by setting the amount of trade, the strike rate and the expiry time of the trade. This is a rather important step because, in absence of setting any parameters on the robot, the robot may go on trading and the account balance will be brought to a zilch in no time at all.

Trading in binary options has immense scope in it but it should never be considered as a full-time profession. The income from trading on online trading websites is good and consistent but it must be considered as a freelancing or a side profession only.