Binary options are also known as ‘Cash or Nothing options’, ‘fixed return options’ or ‘digital options’.
In Contrary to traditional options, a binary option does not give the option holder the title to buy or sell the underlying asset or the option itself.
When a binary option ends , the holder receives a fixed cash payout if they have predicted the price movement accurately. This is usually a percentage of the investment in the binary option contract.
If a trader doesn’t predict the price movement correctly, hew will lose his entire investment.
Ahead of investing in binary options, it is very important that the investor understands how the type of binary option he is using works and how it is assessed. An investor also needs to be comfortable with the fact that he is risking all of the money that he invested in the transaction.
Most binary options brokers operate via an online trading platform.The investor should make sure the binary options broker is Licenced and regulated be the local financial authorities and the place of his residence.
- Pdextrading.com – online trading guide