Speaking in terms of finance, a binary option is a type of option wherein the payoff of your investment has two possibilities which is either all or nothing. These are easier to trade with. The return is always known prior to the purchase and there is a particular maturity period or expiry time for every. Supposing a binary option purchase is made at say A $ and the payoff is B $, at the end of the maturity period if the stock of the invested company is greater than A $ then you receive B $ and supposing it is less you lose A $. This is how cash-or-nothing option under this category works.
There are a lot of advantages of this type of trading over the conventional one: these are easy to understand as only a sense of direction of cash flow is necessary whereas in the traditional methods you need to have a sense of both flow and magnitude; the risk and reward of this trading is pre-determined which is not the case in traditional method; binary options contracts can be as short as 30 seconds which provides the trader with many opportunities which is not the case in traditional trading.
What happens exactly?
This is not an investment per se but trading stocks is not such an easy task. So for this you might need the help of Binary Options Brokers. There are a few things which you need to keep in mind before deciding which direction to flow your money in: firstly you must evaluate the market condition and correctly predict whether the share value of a particular asset is going to rise or fall. There are two basic terms which are used in this trade: Put and Call. Put is predicting whether the price of the share is going to decline and Call is predicting whether the price will increase. If you have a doubt you can always have a word with the Binary Options Brokers who decides the return rate on a winning trade and is always known beforehand. Generally the brokers do not charge any fee per trade nor do they ask for any commission for any type of investment. Make sure you do a background check on various brokers and come to final detailed conclusion as to which one would be the best broker who would be of great help and provides better incentives.
While working with the binary brokers, you can also check if your broker provides call support in your local language as well. It becomes very easy to understand and trade if you talk in local language as you will be able to understand all the details very clearly and precisely. Basically, you broker will assist you to play cards and in that regards, you need to check the broker’s ability before you hire him or her for the purpose of your binary trading.
Trading with Two Brokers
Sometimes it is also useful if you trade with two different brokers specialized in their own industries. It can act as a double bonus and moreover you can verify the feedbacks and suggestions given by both on same stock. It acts as second opinion to avoid loss. But it is only suggested if you are trading with huge amount as their will be double charges as well for the same. Only through a better customer support, you can get in touch with the broker for your trading needs. A broker with a round the clock customer service will be really effective to get the desired result from trading.
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