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In financial terms, a binary option is defined as an option in which there is either a certain amount of profit about the value of an asset or an inevitable loss of the value invested if the option finishes out of the money. With Binary Options and No Deposit Bonuses, you can try a broker platform without risk.
Because a trade can only have two possible results, this option type is called a binary option. Other generic names for binary options are digital, all-or-nothing, and Fixed-return options (FRO—used primarily in the USA).
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When you decide to buy an option, the final result – with the two possible endings – is known from the start.
In classic trading, you must focus on specific assets and hope their value increases. Ultimately, you make a small profit.
Suppose you buy 10 tons of coal for 80 USD per ton on the commodity market. This is an 800 USD investment. By the end of the trading session, if the price is 85 USD, you win a profit of 50 USD. So, in binary options trading, you must predict the price trend or level it hits.
If, let’s say, you predict the price for the same quantity and you know that you will have a 70% profit assured, all you need to do is determine if the price will go up (and then you place a CALL option) or down (when you place PUT options). The option’s expiry time can be from 1 minute to 1 month.
Therefore, you don’t need to wait much. For example, you invest 1,000 USD, predict the price will increase (call option), and the expiry time is 1 hour. If the price rises to 85.01 USD after one hour, you make a 70% profit, which means 560 USD net profit. On the other hand, if the price is 84.99 USD, you lose your 1,000 investment.
Binary options trading is straightforward to understand. The profits can be handsome, and the outcome is clear. In a few transactions on a good day, you can earn the exact amounts as on the traditional market, but the big difference is that you can make a profit when the price goes up or down; you need to predict it correctly.
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