Somehow, somewhere you heard about Binary Options Trading. The trading part of the term gave it up as some sort of financial hogwash. However, beyond that you are blind as a bat as to what Binary Options Trading is. More and more traders from the UK are trying out binary options trading to make money online.
What Is Binary Options Trading?
The reality is that unless you want a pile of technical jargon you would not yearn for a succinct definition of what it means to trade binary options. To dumb down the whole circus called binary options, we have to explore a partition approach, taking it a bit at a time.
The Term “Binary Options”
Binary denotes two or a pair. This represents the main idea behind this form of trading—you have to make one of two choices. Will the price go up or down? Will the price touch a set value or not?
How This Is Possible
This is possible because the only requisite for binary options trading to occur is that the value/price of an asset (be it stock, currency pair, or indices) fluctuates constantly throughout each trading day.
You are not buying the asset as you would if you were trading stock. You are only making predictions of the future behavior (value) of the asset.
What Are The Conditions?
With the major premise of binary options trading cut out, you should know the two factors or supporting beams so to speak that form the pillar of trading binary options.
Time is the limit that guides your speculation. The value of a commodity like gold, may have a net increase in a one-year period. However, it does not mean that there was not one trading day or trading hour within the year that there was a decline in value.
Therefore, when you speculate that the value of an asset will go either up or down, you have to stipulate the period of time within which your prediction will come true. Will it be in 60 seconds, 5 minutes, or one-hour time?
Payout is the reward you get for making a correct prediction. The payout is usually a high percentage of the traded amount. The average is around 85%. However, it can go as high as 95%. In simpler terms, if you trade with $100 and make a correct prediction (also termed as being “in the money”), with the payout being 85%, you will get your $100 back and $85 as your reward, which is $185 in total.
The reward fluctuates between binary options brokers (you trade with) and the form of binary options trading. The nature of the payout system is such that when you make a correct prediction, you get a juicy reward. However, when you make an incorrect prediction, you get nothing (i.e. you lose all your traded money).
With some brokers, you may get a small percentage of your traded money back, when you make an incorrect speculation. It is usually no more than 15%. Small, but way better than losing everything.
Don’t forget to do some research before signing up with a binary options broker. There are many brokers out there, but not all of them are legit companies. The minimum deposit amounts can vary and there are many bonuses to choose from. Keep in mind the binary options trading is risky and you could lose all your capital. Never invest more than you can afford.
Trading binary options for British traders is really not that hard. Luckily all binary options brokers accept UK traders. Just pick your favorite broker and start trading now.