Binary Options are a simple way of trading on financial markets. It is a fair way of trading making it very popular among traders. You know the clearly determined amount in advance, and how much you can make or lose.
They are suitable for those who are new in the world of finance, as they cannot get into debt if they lose. Only the capital that they decide to invest is at risk and there is no possibility of overdrawing their current trading-account balance.
Each option has an expiration. The period in which an option expires might differ, ranging from 1 minute to several hours. The trader is not interested in the price trend during the trading as he is in the price at its end. Once this expires, we learn the closing price, and if it is as predicted, a profit is gained.
You decide to purchase a binary option for Microsoft at the value of 31.4 and believe that the value will increase in 30 minutes. The option price is closed at 32.5 minutes, after 30 minutes, showing an increase, meaning you make a profit.
The binary options trader’s goals is to correctly determine the trend the option will have or the limits about which the price will be moving, when the transaction expires.