If you haven’t read the first part of the article, it’s over here.

Types of binary options to be traded

Anything in the global financial markets can be subject to a binary trade. Many trading platforms offer a very wide range of trading options and opportunities, while others specialize in a particular area.

Typically, the following options to trade will be available to you:

  • Stock options for public trading companies, from large corporations like Facebook and General Electric to smaller public companies like Questcor Pharmaceuticals and NIC.
  • Foreign exchange and currency pairs. Like options trading based on the performance of the individual currency, you can trade one currency against another by placing a buy or sell order on the rise or fall of the Dollar against the Euro, for example.
  • Indices based on the performance of an entire market, such as NASDAQ, FTSE, and Nikkei.
  • Global Commodities, allowing you to trade Gold or Hydrocarbon options alongside other products if desired.

Like the global markets, some online platforms allow you to access individual markets so that if something catches your attention in the Middle East or Africa, you have the opportunity to trade. Emerging markets such as these can be very profitable for those involved in digital options trading, especially when prices are rising rapidly and “One-Touch” options are available.

Once again, the all-or-nothing nature of this type of trading means that anyone can intervene with basic knowledge of how financial markets work; it’s as simple as deciphering a chart and identifying a trend!

Trade Binaires: An Example

If you are new to binary options trading, calculating returns can be difficult. To help you understand how they work, we have designed a step-by-step guide to the process you will go through when you start trading. For our example, we used gold as the commodity, but the same rules would apply if we were trading indices, international currencies or equities.

Your Option

Your online platform asks you if you estimate that Gold will exceed the $1000 level by noon. If you think it will, you can place a buy trade. If you think otherwise, you can initiate a trade for sale. If you already have a buy trade but you think the price will fall, you also have the option to sell your call option.

It is now 11 o’clock and the price of gold is 970 USD. You think the price will reach 1000 USD by noon, and you buy a unit of 5 options each costing 50 USD. We know that either your return will be zero or that you will win $100 per unit, depending on the expiration of your trade (“in the money” or more than 1000 USD) at noon.

From this, you can calculate the risk you have taken and the potential return.

  • Potential return = $100 x 5 units = $500.
  • Options purchased at $50 x 5 units = $250.
  • Potential profit from a successful trade = $500 return – $250 purchase = $250.

At noon, gold reached $1007, bringing you $250.

Selling a transaction before the expiration remains possible, especially to limit losses if you feel that your transaction will close “out of the money”. Selling can be tricky, especially if the expiry time is close, but it is often possible to sell these transactions to investors with more capital, who can afford to hold the transaction and are willing to take over with a higher level of risk.

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