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5.4.1 Binary Options
Let us look at Binary Options – A subsection of the full options contract.
The 1st question that you got to ask yourself when you trade binary option is, has the price of the instrument gone over a certain price over a define time period. The few things to note are:
That is the main thing about binary options but of cos the terminologies that we learn in the options contract of known price, strike price and known asset is all also used here in Binary options. The only difference is the way Binary options are traded. The price that you need to ask yourself is totally in a different concept.
Let us move on to the live examples.
Here we are on the Binary options platform. As we have discussed before on the options module, you can see that to place a trade on the live charts order ticket, you got to ask yourself the following:
Example: Trade going Higher
If it is going to be $20 currently, and then it goes higher within 5 hours, you will get the particular payout price.
That is binary options in a nutshell. Do go and take a look at it yourself. There are very few platforms that are offering it at the moment. Do also look at the regulations in the area you are trading to see what they offer.
You have to remember that whatever instrument you are trading, make sure you have your risk management in place and that is also in our education centre as well, which we look at in more detail in risk and protecting yourself.
Just to summarise, this is an example of how Binary options work and how in real time you will place an order based on analysing the chart of the current instrument that you want to trade on. You can use any other charts to analyse it. For example, you can use SAXO traders to analyse it. After analysing you can place your binary options trade.
Go ahead and find out how you will use it and familiarise yourself with the concepts