Binary options trading is a method of trading that can greatly reduce your overall risk while increasing your potential for large returns. Essentially it is described as trading that answers a yes or no proposition to the person entering into the agreement. Due to this it is actually one of the simplest means of trading, especially in the options market. Those that are new to the trading scene enjoy this method as there is less concern about making the wrong choices given they have a limited amount of knowledge of the market.
To be successful trading in this fashion it is essential that you fully understand how the process works. There are only certain markets that can use binary options trading, there are some disadvantages to be aware of and only certain companies are allowed to offer this as an option to traders. Most countries have brokers that are There is an option to utilize this in markets in the U.S., but one should only take advantage of it if they are fully aware of how they are structured and how the structuring can affect the outcome.
In short, by trading in the method you are capping both your potential earnings as well as your potential losses. The proposition is stated as to whether or not you believe that a certain stock or commodity will be above or below a certain price at a certain time of the day. If you believe that it will be above the stated price you would buy the option, but if you believe it will be below you would sell.
The reward is determined by the bid and offer prices and whether or not your belief about the trend in price is accurate. For example, if you choose to buy because you believe the price will be higher than proposed your earnings, if accurate, would be $100 minus the offer price. If you are wrong, you are out of the money that you had invested.
If this means of trading sound exciting and profitable to you then you are not alone. It has become very popular due to the opportunity to make large gains in a short amount of time. The first exchange to offer this in the U.S. is the Nadex exchange. The platform allows you to make these trades live while enable the user to also access real-time charts as well as the market. If you enjoy trading and have not given this a try you are missing out on a huge opportunity.
The majority of non-US traders will find that it's even easier for them to trade with any of at least a dozen different binary options brokers that are available. These brokers are often also linked to binary options auto-traders that remove all of the guesswork on your behalf.