A Quick Guide To Binary Trading

While binary trading is an exotic option, it’s not as confusing to navigate as you might think. In fact, it’s one of the easier trading options to understand, and it’s a quick way to make a potential profit if you understand the value of your asset.

The idea behind binary trading is simple: You need to decide whether you believe the value of an asset will be above a set price by a certain time. If you think it will, you purchase a call. If you think it won’t, you purchase a put. Every option settles at either $0 or $100. If the set time has passed and the value of the asset is above the set price, you get a fixed return. However, you’ll lose your investment if the asset doesn’t reach its set price.

For example, say you have an asset with a bid of $40, an offer of $50, and a question of whether the asset will be above $2,000 by 1 p.m. If you think the asset won’t get that high, you can sell for $40 right then. However, if you do, you can purchase the call for $50. If the option expires above $2,000, it’s worth $100. If you were right, you make a profit of $50 ($100 – $50 = $50). If you’re wrong, you lose your $50 investment.

Keep reading for another example of how binary trading works and to learn even more about this trading option. With a good understanding of the market, this might be the right option for you.