Binary options trading – The basics and most popular types

Although many business investors are still unfamiliar with them, binary trading options have become quite popular and attractive in the last couple of years. Even though they are often confused with mutual funds, bonds and stocks, binary options are quite different. They are also quite simpler, as well.

Instead of making an investment in a particular company, like Facebook, Google or Exxon, with binary options, you will essentially bet on fluctuations in the prices of various options. If you make a correct prediction, you will win a certain, predetermined sum of money. If you make a wrong prediction, you will lose your entire investment.

No rights or wrongs

man in suit holding cash Losses and gains are not actually determined by how “right” or “wrong” you end up being. What this actually means, is that you will earn the exact sum of money, regardless of whether the stock you are betting on is valued at $20, $21 or $21.50. Also, if you make a wrong bet, you will still lose your money, regardless of whether you missed your prediction by a couple of dollars or a single cent.

Different types

Binary options trading can be conducted in the US, Canada or on an international level. When trading, you also have the option of investing in both international and national options. When it comes to the actual types of binary options, the following are some of the most popular and prominent on the market.

Touch-based options

Touch options come in three main types; the double touch, the no touch and the touch options. If you decide to bet on a touch option, you will basically bet that the value of a particular option will rise above or up to a certain amount. However, if you decide to invest in a no touch option, it means that you will bet that the value of a particular investment will decrease to a certain level. Lastly, betting on a double touch binary option will mean that you will place two different investment bets on two different options. Should you make such an investment, you will earn money in case either of these predictions ends up being correct.

All of these options are usually bought over the weekends and subsequently traded during the weeks. Once you make your bets, you will have an entire week to make a certain number of changes, which can lead you to earn or lose the money.

Digital binary options

These are. Perhaps, the most popular types of binary options, mainly due to their simplicity. They are also more commonly known as call-put or up-down options, as the investors only have to bet whether the options will fall below or rise above the active price of the option within a certain period.

This period can be as long as an entire day or as short as 10-15 minutes. Once this period is over, you will receive an email informing you about the current prices of the options you bet on.

60 – second options

climbing steps These options are, for the most part, almost identical to the digital options. The only notable difference between them is that you will bet that a certain stock price will fall or rise in value over the period of 60 seconds. As with the digital options, here, you will also win or lose depending on the accuracy of your predictions, regardless of how much money you lost or earned.