Frequently Asked Questions about Trading Binary Options
What are binary options?
A binary option is a contract with the condition of a price rise or fall during the set period. Binary options are also called digital options. The profit is fixed and known at the moment of making a deal. If the option expires in-the-money, the fixed amount known at the moment of purchase is paid.
What is a CALL option?
A Call option is an option the underlying price of which is expected to rise. If an investor expects the price of the underlying asset to go up, he needs to choose a CALL option. If the price of the underlying at the expiry time is higher than at the moment of purchase, an investor gets 70% profit no matter how much the price grows, even if it’s just 0.001. If the price is the same as at the moment of purchase, the investor gets back the whole amount of his investment.
What is a PUT option?
A PUT option is an option the underlying price of which is expected to fall. If an investor expects the price of the underlying to come down, he needs to choose a PUT option. If the price of the underlying at the expiry is lower than at the moment of purchase, 70% profit no matter how much the price falls, even if it’s just 0.001. If the price is the same as at the moment of purchase, the investor gets back the whole amount of his investment.
What is a minimum investment?
An investment is an amount of money you spend to buy a binary option. You can invest in binary options from $10,000 up to 20,000. Brokers have a minimum investment requirement. As a rule, this is $25.00, and you cannot buy any option if your balance is less. For instance, AnyOption minimum requirement to buy a binary option is $25.00.
How can I buy a binary option?
First, you need to sign up with the broker’s website and top on your personal account. Then you choose an asset (shares, commodities, indices, currencies). For instance, you chose to buy Apple shares, you need to choose whether the price will go up or down. If you anticipate rise, you need to click CALL and enter the amount to buy a binary option. Then you set the expiry – from a minute up to a month. If you believe that the price will rise during the next hour, buy the binary option for an hour. Click the confirm button and it’s done.
How much money can I make with binary options?
If your price forecast comes true, you get a fixed profit at a level of 65% up to 71%. Brokers offer different terms and payoffs. For instance, AnyOption broker offers various risk-to- reward ratios and win loss rates.
What if I make wrong forecast?
If you make wrong forecast, and by the time of expiry the price of the binary option doesn’t match your prediction, you will lose the whole amount of the investment. Some brokers do not allow their customers to lose all, and for instance the first binary option broker in the world returns up to 15% of the investment amount in case of loss.
How much can I invest in binary options?
Maximum amounts for binary options purchase are about $3,000 to 20,000 USD depending on the broker. You can buy the same binary option as many times as you want. Moreover, you can buy different assets together.
What is an expiry level?
An expiry level is the time of termination of a binary option. The expiry level shows the estimated price of the underlying asset at the moment of the contract completion.
For what period can I buy binary options?
You can expect the price will rise or fall at a certain moment. You can buy binary options for a minute, 10 minutes, 15 minutes, hour, day, week and month. When buying binary options you know how much time left till the moment of expiration.
Why does the broker refuse to show an underlying asset?
Binary options can be bought only during trading hours. In the world of the exchange trade there are such periods as the Pacific, Asian, European and American trading sessions. Therefore, you can buy, for instance, American stock only during the American trading hours.
How can I make correct price forecast?
To earn on binary options trading regularly, you need to make analysis of the underlying assets and their prices. If you want to get an accurate forecast, make technical and fundamental analysis. You can use special strategies as well to watch price action signals which are described in details on the website.