Binary option trading is gaining rapid popularity all around the world. The concept of this method is based on forecasting the price of a certain active in the nearest future.
For successful operation it is not enough just to use intuition and to guess. It is necessary to know and understand world market tendentions and the key factors, that can lead to price incease or reduction.
Traders can operate with such instruments:
- currency pairs;
- stock market indices;
- securities (for example, famous companies’ shares);
- commodities (such as oil, gas, precious metals and so on);
Peculiarities of binary options
This is a great variant for unexperienced traders. This type of trading has such features:
- Manageable risk level. The sum, which can be earned or lost by a person, is known before making an operation.
- For making profit, it is enough to know only basic things about actives. The value of benefit depends on direction of price movement. The end difference in price doesn’t influence the profit much.
- To trade binary options it is not necessary to have a big sum of money, because a person purchases not an active itself, but a contract.
- High profitability. It is possible to get high benefit, bacause the level of it depends on the fact, that price is increasing or reducing, but not on the difference between start and final cost.
Binary option trading harbours the risk of losing funds. There are 2 main reasons:
- Wrong choice of a broker. There are many frauds, because there are no strict legislative requirements to brokers, that let people trade binary options. Some pseudo companies give traders a possibility only to put money on the account, but not to withdraw them. This way crooks can take over your money.
- Wrong choice of strategy. Even if the broker is reliable, a person can lose funds if the forecast about the price of a certain active is false.
Peculiarities of American binary options
The main feature of american binary options is that prices are audited permanently. So, it is possible to exercise option in any time from its opening till its closing.
One more special thing about American binary options is that the majority of brokers registered in this country are reliable, because the legislative regulation had been strengthened.
Peculiarities of European binary options
The unique characteristic of European binary options is that the price is audited only on the date of the option closing.