Binary Option Forex Trading Definition

What are binary options

A binary option is a type of option with a stock-still payout in which you predict the issue from two possible results. If your prediction is correct, you receive the agreed payout. If non, you lose your initial pale, and nil more. It’due south called ‘binary’ because there tin can be only 2 outcomes – win or lose.

Advantages of binary options trading

Aside from the simplicity of its ‘yes or no’ proposition, binary options trading is also very flexible. Information technology gives you the power to trade:

Why yous should trade binary options with Binary.com

Enjoy an award-winning online trading platform with trading atmospheric condition that are ideal for new and experienced traders.

Award-winning online trading platform

• Simple and intuitive
  
  Enjoy a trading platform that’s like shooting fish in a barrel to navigate and use.
• Instant access
  
  Open an account and start trading in minutes.
• Bachelor 24/seven
  
  Trade when you want. Our Synthetic Indices are available even on weekends.
• Patented technology
  
  Merchandise with the industry pioneer and holder of a patented pricing engineering science.
• Security and privacy
  
  Trade confidently, knowing that your personal data, transactions, and funds are always secure.

All conditions and durations

• All markets and conditions
  
  Merchandise currencies, stock indices, commodities and more in ascent, falling, sideways, quiet, and volatile markets.
• Brusk to long-term durations
  
  Choose timeframes from 10 seconds to 365 days.

Competitive and transparent pricing

• Sharp, benchmarked prices
  
  Receive prices that are benchmarked against interbank rates.
• Transparent risk and potential reward
  
  Know how much you volition win or lose before yous buy the contract.
• Protect your profits
  
  Sell your long-term contracts before expiry to protect any profits you may have made or to minimise your losses.
• Ii-style pricing
  
  Receive quotes for a trade and countertrade, so y’all always get unbiased, transparent rates.

Ideal for new and experienced traders

• Low minimum stakes
  
  Deposit as footling as 5 USD to start trading.
• Trade according to your preferred strategy
  
  Trade based on “gut feel” or rely on technical and fundamental analysis.
• Flexible
  
  Cull from over one million possible trade variations at any fourth dimension, and customise your trades according to your preferred strategy.
• Scalable
  
  Earn the aforementioned proportional return on stakes of all values.

How to merchandise binary options

Binary options trading is relatively easy. Y’all tin purchase a contract in merely three steps:

Footstep i: Define your position

The showtime step is to gear up the parameters of your trade. There are 5 trade parameters you need to arrange in lodge to receive a price for the contract:

Cull from four available markets:

• Forex
  
  Major and small pairs, plus Smart FX indices
• Stock Indices
  
  All major worldwide stock indices sourced from the over-the-counter marketplace
• Bolt
  
  Major commodities such as gold, silver, and oil
• Constructed Indices
  
  Our proprietary synthetic indices that simulate market forces

Choose from 3 main trade types:

• Up/Downwardly
  
  Predict if the market will rise or autumn from its current level, or if it volition end higher or lower than a price target.
• Touch on/No bear upon
  
  Predict if the market will impact or not touch a price target.
• In/Out
  
  Predict if the market will stay betwixt or go outside 2 toll targets.

Aside from the three master merchandise types in a higher place, you also get Asians and Digits trade types exclusively with our Synthetic Indices.

Set the length of your merchandise from 10 seconds to 365 days, whether you have a brusk-term or long-term view of the markets.

Fix bulwark(southward) to define your position and trigger the payout y’all’ll receive.

Choose the payout you wish to receive from correctly predicting this contract.

Stride 2: Go your price

The cost of the contract is automatically calculated by our patented pricing technology based on the parameters you’ve divers in Footstep 1. Our prices are benchmarked confronting the interbank options market place, so you always get the virtually competitive prices. This means that you’ll always receive fair and transparent pricing, whatever your position.

Step iii: Make your trade

When you are satisfied with the price that you receive, execute your trade immediately. With our unique platform, there’south no risk of ‘slippage’ or gaping markets. And most importantly, at that place are no hidden fees. Y’all can too sell back any long-term trades at whatever time to profit from favourable market atmospheric condition.

Types of trades

Binary.com offers the following trade types that volition help you execute your market place view or strategy:

Delight notation that Asians, Digits, Reset Phone call/Reset Put, High Ticks/Low Ticks, and Only Ups/Only Downs are available exclusively with our Synthetic Indices.

Range of markets

Binary options allow y’all to trade on a wide range of underlying markets. One of the advantages of trading binary options is that y’all are not buying or selling an actual asset, only a contract that determines how that asset performs over a period of time. This limits your take chances and makes it easy for anyone to start trading.

Available markets

Forex

Merchandise popular major and minor currency pairs, plus Smart FX indices – weighted indices that measure the value of a currency against a basket of major currencies.

There are four types of Smart FX indices that you can trade:

• AUD Index – Measures the value of the Australian dollar against a handbasket of v global currencies (USD, EUR, GBP, JPY, CAD), each weighted by 20%
• EUR Index – Measures the value of the Euro against a handbasket of v global currencies (USD, AUD, GBP, JPY, CAD), each weighted by 20%
• GBP Index – Measures the value of the British Pound against a basket of v global currencies (USD, EUR, AUD, JPY, CAD), each weighted by 20%
• USD Index – Measures the value of the U.s.a. dollar confronting a handbasket of v global currencies (EUR, GBP, JPY, CAD, AUD), each weighted by xx%

Stock Indices

Enjoy exciting opportunities to merchandise stock indices with the benefit of real-time charts and pricing.

Our stock indices are sourced from the over-the-counter (OTC) market – sources outside of the centralised exchanges. Please note that due to their OTC nature, the prices of our stock indices may differ from their counterparts on centralised exchanges.

Commodities

We offer all iv precious metals – gold, silver, palladium, and platinum – likewise as energy in our list of bolt.

Synthetic Indices

Binary.com’s Synthetic Indices are synthetic indices that mimic real-globe market volatility and are available for trading 24/7. They are based on a cryptographically secure random number generator audited for fairness by an contained third party.

Constructed Indices requite yous exclusive access to various trade types, such as Upwardly/Down, Bear upon/No Touch, In/Out, Asians, Digits, Lookbacks, Reset Call/Reset Put, Phone call Spread/Put Spread, Only Ups/Merely Downs, and more.

Synthetic Indices are farther categorised into 2 classes:

• Continuous Indices – Choose from the Volatility ten (1s) Index, Volatility 25 (1s) Alphabetize, Volatility fifty (1s) Alphabetize, Volatility 75 (1s) Index, Volatility 100 (1s) Index, Volatility 10 Index, Volatility 25 Alphabetize, Volatility 50 Index, Volatility 75 Alphabetize, and Volatility 100 Index. These indices correspond to fake markets with constant volatilities of 10%, 25%, 50%, 75%, and 100% respectively.
• Daily Reset Indices – Daily Reset Indices replicate markets with a bullish and bearish tendency with a constant volatility. The Balderdash Market and Bear Market indices outset at 00:00 GMT each day, replicating bullish and bearish markets respectively.

Glossary

Barrier(south)

The bulwark of a binary option trade is the price target yous set for the underlying. You tin can cull trades that stay beneath or get above a cost target, or stay between ii targets.

Binary pick

A binary choice is a contract purchased by a trader, which pays a pre-determined corporeality if their prediction is correct.

Bolt

Commodities are resources that are grown or extracted from the ground, such as silver, gold and oil. On Binary.com, they are priced in US dollars.

Contract menstruation

The contract period is the timeframe of a trade. Information technology is also called the duration.

Derivative

A derivative is a financial instrument whose value is determined by reference to an underlying market. Derivatives are normally traded in the inter-bank market, and binaries are one of the simplest forms of derivatives.

Duration

The duration is the length of a purchased trade (run across ‘contract flow’).

Ends Betwixt/Ends Outside trades

An Ends Between trade pays out if the marketplace exit toll is strictly college than the low price target AND strictly lower than the high price target. An Ends Outside binary pays out if the marketplace leave toll is EITHER strictly college than the high cost target OR strictly lower than the depression price target.

Entry spot price

The entry spot price is the starting cost of the trade purchased by a trader.

Decease price

The expiry price is the price of the underlying when the contract expires.

Forex

In strange substitution markets, traders can enter contracts based on the change in price of one currency equally it relates to another currency. For example if a trader selects Ascent in the EUR/USD market, they are predicting that the value of the Euro will rise in relation to the value of the US dollar.

GMT

GMT stands for Greenwich Mean Time, the official time used in the UK during wintertime. In summertime, the UK changes to British Summer Time, which is GMT + i hour. All times on the Binary.com site use GMT all yr round.

Higher/Lower trades

These are trades where the trader predicts if a market will finish college or lower than a specified toll target.

Stock Indices

Stock market place indices measure the value of a choice of companies in the stock market.

In/Out trades

These are trades where the trader selects a low and loftier barrier, and predicts if the market volition stay inside these barriers or get exterior them (see too ‘Stays Between/Goes Outside trades’).

Market go out price

The market exit price is the price in result at the end of the contract period.

No Affect trades

These are trades where the trader selects a price target, and predicts that the marketplace will never bear on the target before the expiry of the trade.

(One) Touch trades

These are trades where the trader selects a price target, and predicts that the market will touch the target before the expiry of the trade.

Payout

The payout is the corporeality paid to an options trader if their prediction is right.

Pip

Pip stands for ‘pct in point’ which is generally the fourth decimal place (i.e. 0.0001).

Turn a profit

The profit is the departure between the purchase price (the pale) and the payout on a winning trade.

Synthetic Indices

The constructed indices simulate various real market place situations and provide an ideal platform for getting used to trading and testing strategies under various market place weather. These indices depend on volatility and drift, and help users to try out scenarios like – high volatility, low volatility, bullish and bearish trends.

Resale toll

The resale price indicates a contract’s current market cost. Resale prices are on a best-efforts ground and may non exist available at all times later on purchase. Meet ‘Sell option’ for more than details on selling contracts before expiry.

Return

The return is the money realized when the contract expires (see ‘Payout’).

Rise/Fall trades

These are trades where the trader predicts if a market will rise or fall at the end of a selected fourth dimension menstruum.

Sell option

It is sometimes possible to sell an option earlier the expiry of a trade, just only if a off-white price can be determined. If this pick is available, you will see a ‘Sell’ button within the popup window, later on clicking on the ‘View’ button next to your trade in the portfolio.

Spot price

This is the current cost at which an underlying can be bought or sold at a particular fourth dimension.

Pale

The pale is the amount that a trader must pay to enter into a trade.

Stays Between/Goes Exterior trades

A Stays Betwixt trade pays out if the market stays betwixt (does not touch) BOTH the high bulwark or the depression barrier at any fourth dimension during the period chosen by a trader. A Goes Exterior trade pays out if the market touches EITHER the high barrier or the depression bulwark at whatever fourth dimension during the menses chosen by a trader.

Tick

A tick is the minimum upward or downward movement in the price of a marketplace.

Underlying

Each binary option is a prediction on the futurity movement of an underlying market.