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The truth is, binary trading is quite profitable, but you’re living in the dark as you fail to understand where the real potential is. That’s why Profit Genius System tells you the TRUTH about binary trading, and goes over why only 5% of all traders profit with this type of trading.
If the trader believes that the price of the asset under consideration would increase or if a particular economic event affecting the price of the asset would occur he may buy. On the other hand if he thinks the opposite he may sell. The result of the insight of the trader would be known on the expiration date, where the payoff is made accordingly as per the contract.
Online Binary option trading is fast becoming a popular financial market instrument that empowers the traders with a flexible approach without the complexities that are involved in the traditional trading options. High payouts can be attained within short trading durations. This is the reason for their growing popularity.
Working of the binary options
As mentioned, the binary options work on the criteria of two possible outcomes in a trade – gain or loss. Therefore the traders have the option of either buy or sell. The factors that decide the potentiality of an outcome are the price of the asset in the future, the expiry time and the direction of the movement of the asset. Also speculation in the financial market with regard to the happening or not happening of a particular condition or scenario, during a specified time also affects the binary options trade. The working of the binary options here is explained through an example.
We take a commodity “A”. Let us assume that its present share price is 430.25 and as a trader you want to speculate the price movement of this share within a time frame of say 2 hours.
As a trader, if you speculate that the price of the share “A” would rise above the current level then you should buy the binary call option. Now if the price of the share “A” goes above the current level at the end of the expiration time, that is, two hours, the option would be treated as “in-the-money” and you would receive the fixed amount of return as decided before hand. However if the price of the share “A” does not rise above the current price level, the trade would be termed as “out-of-the-money” and there would be no payout.
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