Binary Options FAQ
Binary options are also known as fixed return and digital options. They can be used to trade underlying assets and they payout pre-determined profits and losses that are known by all parties before the contracts are exercised. If the binary options expires in-the-money, then OptionRally pays out a profit as high as 78% of the original deposit. This result is solely dependent on the correct selection of price direction and not on the size or magnitude of its movement. If the binary options expires out-of-the-money, then OptionRally pays out a 10% to 15% refund of the original deposit.
For example, imagine that your technical analysis indicates that Gold is very likely to appreciate in value within the current trading day. As such, you could now decide to activate a ‘call’ binary option whose underlying asset is the commodity Gold. You next elect to invest $1000 and select an expiry time of 30 minutes.
If your calculations are right and the price of Gold rises by just $1 higher than your binary option’s opening or strike price before the 30 minutes elapses, then you will be in-the-money. Consequently, OptionRally will pay you a profit as high as 78% of your $1000 deposit resulting in a new balance of $1780. Not bad for 30 minutes work.
However, if the price of Gold fail to achieve its target and finishes lower than its opening or strike price after 30 minutes, then you will be out-of-the-money. Under such circumstances, OptionRally will pay you a refund between 10% and 15% of your $1000 investment.
You should also note carefully that, unlike their traditional counterparts, binary options are always settled in cash without ever involving the exchange of any other assets.
Trading currency pairs on Forex is a very popular form of investment speculation these days. One of the main reasons for this is that many novices are attracted to Forex because of its enormous daily turnover which is reputed to be in the region of $3 trillion. They believe that with such a large pot of money available that they should readily be able to grab a slice of it.
However, reality paints a different picture by demonstrating the only a small percentage of investors are successful. This is because many forces exist that strongly influence the price formations and structures of currency pairs making them hard to predict and difficult to trade profitably.
Consequently, novices are faced with a steep learning curve that they need to overcome in order to achieve success. One of the biggest complexities that they face is that they always have to evaluate not only the direction that the price of a currency pair will move but also its size or magnitude. This can be quite a daunting task for the inexperienced.
As an alternative, many traders have started to use binary options as a method to trade Forex because of the many simplifying benefits that they offer. For example, by taking such an action you will then be able to just focus on forecasting the price direction of a currency pair without the necessity to evaluate its size. This means that, for a ‘call’ binary option, if price raises by just one pip higher than its opening price before its expiry time elapses then you will be in-the-money. In contrast, you need price to finish at least 1 pip lower than its opening or strike price for a ‘put’ binary option in order to register a profit.
Another important task that you must undertake in order to directly trade Forex successfully is to design a well-tested risk and money management strategy so that you can control your risk exposure per trade. However, if you trade Forex using binary options you do not need to do this because you always know exactly your pre-determined profits and losses will be even before your options are executed.
Forex operates 24 hours a day from Sunday 5:00pm EST to Friday 4:00pm EST and is the world’s most traded market. Each trading day, Forex commences in Sydney and then circulates around the world passing through Tokyo, London and New York. During this time, you have the opportunity to trade changes in currency movements. You could view Forex as a huge melting pot because no other institution reacts to the current international events more than it does. In addition, Forex exists because of the constant need to trade foreign currencies against each other, hedge risk, and make international trade possible.
As currencies move against each other in Forex in real time, you can profit from these changes by correctly predicting which ones will increase in value against others. To do so, you must first purchase your chosen currency and then sell it later after it appreciates in value against the other currency. You must be aware that the time required for your profit to be achieved could range from a very short period to a very long one.
The majority of Forex trades involve the biggest and most liquid currencies which are termed the ‘Majors’ and include US Dollar (USD), Japanese Yen (Yen), Euro (EUR), British Pound (GBP), Swiss Franc (CHF), Canadian Dollar (CAD), and Australian Dollar (AUD). More than 85% of all Forex currency transactions are centered on these major currency pairs, i.e. EUR/USD, USD/YEN, GBP/USD, USD/CHF, AUD/USD, and USD/CAD.
You will require a software trading platform in order to trade binary options which will allow you to make high quality and informed decisions on each investment that you intend to execute. In addition, such a facility should provide you as a minimum requirement rapid, secured and accurate trade execution, status tracking, important financial information and news together with the ability to allow you to accomplish efficient depositing and withdrawing of your funds.
In essence, you need a world-class binary option trading platform as an essential and primary requirement that is totally reliable and that is not prone to constant crashes or down-time. To achieve such an objective, OptionRally has invested millions of dollars in order to create a global-beating software platform for binary options trading. As a consequent, OptionRally is highly confident that the advanced, secure and highly sophisticated trading facilities of its platform will help you launch a successful and lucrative investment career in binary options trading. In addition, you will find that as your skills progress, you will have the specialized tools that will help you elevate your game to the next level.
When designing its binary options trading platform, OptionRally’s prime specification was to ensure its simplistic use while still providing a robust trading environment. As such, our clients have access to some of the most powerful trading tools available in the market today. Visit our website at http://www.optionrally.com/Open to learn more about the advanced trading facilities provided, as a matter of course, by OptionRally.
As the name implies, there can only be two possible outcomes when you trade binary options. You can either win a pre-determined profit or lose a portion of your deposit. Although this investment vehicle is based on an underlying security such as a stock, currency pair or commodity, you do not need to understand their intricacies. To execute an option, you must first select the size of your deposit. You then need to determine in which direction you anticipate your binary option to move.
You should action a ‘call’ option if you think that the price of the underlying asset will increase in value so that it is higher than your opening or strike price before your selected expiry time elapses. If you are successful, then OptionRally will pay you an above average profit equaling 78% of your initial deposit. If your target is not reached within the expiry time, then you will receive a 10% to 15% refund.
Conversely, if you expect price to fall below your opening or strike price before your chosen expiry time elapses, then you should activate a ‘put’ option. OptionRally will pay you exactly the same percentages as stated above for the ‘call’ option depending on your result.
1. Research your underlining assets – As the value of all binary options is calculated using the financial data of their underlying assets, you should ensure that you are familiar with the trading patterns of these securities in order to maximize your chances of success.
2. Evaluate current price trends – The recent price movements of an asset are an excellent indicator concerning in which direction price will advance in the near future. By analyzing these trends carefully will greatly assist you in selecting binary options that will end in-the-money.
3. Understanding risk and money management - You must ensure that you appreciate the relationship between your rewards and your risks in order to provide maximum protection for your account balance. For instance, you can afford to win as many trades as you lose as long as your winning ones are bigger in size than your losses.
The Knock-on Effect
Many traders consider this strategy to be very effective. Basically, you need to realize that the performance of one binary option can affect that of another. For example, consider that you think that the shares of Apple are about to appreciate in the near term. As such, you could correctly decide to open a ‘call’ binary option using the stocks of Apple as its underlying asset.
However, you should also evaluate what is likely to happen to the index S&P500 of which Apple is a composite company. If the shares of Apple do rise, does that not also imply that the S&P500 will do so as well? If your analysis confirms this likelihood then you should also consider opening a ‘call’ binary option using the index S&P500 as the underlying asset.
By exploiting ‘knock-on’, you could create opportunities to compound and maximize your profits. In addition, you could also minimize your risk exposure in the process.
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