An Introduction to Binary Options
Unlike bonds, stocks, and mutual funds, binary options is not that difficult to understand. Rather than investing in a specific company, someone investing in binary options is simply making bets on the price fluctuations of a certain option's price. Individuals who got their guesses right gets to win a predetermined amount. Meanwhile, individuals who made the wrong bet lose all of their investment.
An investor can make bets on the value of a particular investment whether it goes up or down. More so, these investors can establish a time range as to when a stock reaches a certain high or low. It can be as short as several minutes to weeks at most. Get help from a very good auto-trader review.
Lets go over an example to better understand how binary options work. The main point is that as an investor, you should be able to guess when an investment can generate profit or the other way around. For instance, an investor bets $100 on a company stock with a present value of $20 for each share that its price will increase to $20.50 or more by the day's end. If the investor gets it right, that investor will get that $100 at the end of the day or lose it all if you didn't get it right.
Types of Binary Options
It is legal to trade binary options in the U.S. or in other countries. The U.S. Securities and Exchange Commission officially categorize binary options as an exotic "option."
o Digital Options - is the easiest and most popular form of binary options. An investor only has to bet whether the trading price will go up or down within a specific time frame.
o Touch Options - it has three sub-types:
o Touch - are bets whether an option's value will increase or become higher than a specific amount. Visit http://www.encyclopedia.com/doc/1O25-mngmt.html if you want to read more.
o No touch - are bets on fluctuation of an investment's value whether it goes down to a particular level.
o Double touch - bet on two different position on an investment's value.
o Sixty-second Binary Options - are similar to digital options that generate profits. What makes it different is that you place a bet whether an investment goes up or down within a sixty-second time frame.
o Boundary Options - Is making bets that a specific investment retains the same value for a specific time frame.
o Binary META - More complicated but offers more trading options to investors. An investor can make bets and increase or double the amount by the middle of the day. You can also sell early on in case you sense that the bet is not the right one.
Be careful when doing any kind of trading. Starting with binary options is a great way to start trading for many.