Binary trading is a digital trading in which you get rewards from trading option. This type of trading is a high risk trading and the other draw of this type of trading is that the contracts expires usually after one hour. But there are many advantages of a binary option such as you can make extensive returns on your investment. This is a risky trading but also offers excitement to the ones who believe in their luck. There are different types of investors such as risk taker and conservative. Both the types can be lucrative and exciting.
It is very important to understand what binary option is and how it works before you start investing in trading. In simple words it can be explained as a trading when a trader buys a contract on an asset and makes prediction whether the value of the asset is going to decrease or increase. If the asset value increases you are going to make a profit and if it decreases you are going to lose. If you gained money out of your investment prediction it is referred to as in-the money. In case you lose than it is considered as out-of-money.
How binary option works?
For example let us assume that you are an online trader. The first thing you will do is to find a website of binary option broker and will choose asset you are interested in investing. After that you will find contract related to that asset, at the initial stage majority of traders gets length of one hour as an expiry period. You can purchase contracts for about 5-15 minutes before they expire. Within that span of time your asset will fluctuate in value but this has no relevance with out –of- money or in- money. The thing that matters here is the value of the asset. Read 24Option Review to know more.
After the contract will expire or matures and if you have selected correct investment then you will be considered as in money. Every trading option has risk involved and in this type of trading there is a huge risk involved.