Binary Options Trading Basics

[gajapriya]

We are all familiar with the basics of trading - Binary Champ Review a trader studies the market and buys an asset at certain price, hoping that its price will rise and he will sell the asset at the new higher price and profit from the difference. In binary options trading though this is different. Yes, the trader, otherwise known as the buyer, will look into the market and yes he will decipher which way he thinks the market will move, but the outcome and method of profiting is somewhat different.

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Traditional trading: there are a multitude of possible outcomes, none of which are known when buying the asset Binary option trading: there are only 3 possible outcomes - or the asset expires in-the-money, out-of-the-money or at-the-money. All three outcomes are fully known when purchasing the option and therefore all potential risks can be taken into account.

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Traditional trading: the profit or loss is dependent on the magnitude of the price rise/fall of the asset e.g. if 200 shares are brought at $10 each, the amount of profit or loss is totally dependent on how much the price of the asset rises or falls Binary options trading: it is only the direction of the move that is important and not the magnitude of it. So, if a buyer places a $2,000 Call option on an underlying asset with a 71% return rate, he knows from the onset that if the option expires in-the-money then he will receive $3,420 and if it expires out-of-the-money then he will receive a 15% payback of $300.

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