Introduction to Binary Options
A trader will receive a predetermined payout if the binary option expires in-the-money. He will lose a predetermined amount of his original stake if the option expires out-of-the-money. All markets - currencies, stocks, commodities, and market indices - can be underlying assets for binary options. The degree to which the option closes in or out-of-the-money does not matter as it does with a traditional option.
The beauty of trading binary options is the inherent simplicity. If a prediction is correct, the trader receives a refund of the stake plus a return on investment that is typically 71-88%. If the trader is wrong, the broker will return a small percentage of the original stake. Unlike traditional options, binary options do not have set prices: the trader decides upon the amount of money he wants to risk and invests that amount when he buys the option.
Furthermore, the shorter duration of these contracts makes binary options more suitable for short-term trading than their traditional counterparts. In the past few years, online binary option trading has grown exponentially. Digital trades can utilize many more underlying assets, and have much more flexibility in their timing, strike prices, and contract options.
Since 2009, they have become very popular among traders as a way to control risk in options trading, in turn allowing for more dynamic strategies to be developed. Finally, constantly evolving technology better facilitates digital trading and allows investors to make more lucrative trades. The beauty of trading binary options is the inherent simplicity.
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