Binary options or Digital options as it is also called is fast becoming popular in the financial markets as people are rushing into the trade daily to make easy and fast money online. More so the pay-out rate is high compared to other financial trades.
Electronic devices have two states which could be “on” or “off”. In like manner in digital options trading, you are either in the money (ITM) – ON and get pay-out or out of the money (OTM) –Off and lose your trade deal. Pay-outs could be up to 85% depending on the broker and it is agreed upon at the beginning of the contract and is not affected by the price asset moves. Hence pay-outs are the same regardless of how much (whether by $0.01 or $0.05) you are in money.
One major advantage of binary trading option is it has a limited risk option. When a trader is out of money, he only loses the premium he paid for that binary position. Hence, there would be no need to bother about losing his trade discipline. Another advantage is that there are short time frames (one hour and below) for trading binaries.
A number strategies for trading binary options exists if one must trade to make money online.
This is also known as “above/below” or “call/put”. It is the most commonly used binary options. If at expiration, the market is higher than the strike price of an above binary, a trader receives a pay-out on a long binary option.
– One Touch:
Some binary options trading platforms generate payoff even before expiration time when a trader’s trigger level trades in the underlying market.
It is also called the “Range” since at expiration, a range is used to compare the underlying market. An –in range binary is paid when the market ends in the range. Similarly, an –out range is paid when the market ends up outside the market.