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Know About Binary Options Trading

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Binary Options or Digital Options of Fixed Return Option (FRO) trading is an easy way to trade price fluctuations in multiple global markets. It basically hinges on two outcomes - either one could gain a lot or lose the money they’d invested at the end of expiration time/date.  It is about predicting the way market goes without actually owning the underlying asset.  Since more and more investors are taking the binary options route, it would be worthwhile to check out the 24 option affiliate program as well.

Here is how binary options works:  The binary options got what is called a ‘strike’ price and expiry period. Consider the shares of Microsoft. You are purchasing binary call options for common shares of Microsoft it with a strike price of $100 per share and a specified binary payoff of $700. The time frame or expiration date may vary from minutes to months, and you can pick the one you want. If the stock happens to trade above the strike price at the end of the expiration date, you’ll receive the $700 payout. On the other hand, if the stock is trading below $100, you’ll receive nothing. Some brokers offer a 70% payout if the option expires above the strike price, instead of a fixed payoff. I.e., the investor will get $170 in this case if the stock trades above $100 at the expiration date/time. If it is not, you might receive nothing or a small refund of $15 or so.

The advantage of Binary Options trading is that you know the risks and rewards from the very beginning. The bottom line is that you got to make the call, whether the underlying asset going up or down. There are no liquidity concerns either as you’re not owning the underlying asset at any point of time. On the downside, if you closely analyze the scenario, you’ll realize that the reward is always lower than the risk. The traders must be right a higher % of times if he/she is to cover the losses. Also, it is advisable to pay close attention to broker's rules, especially regarding payouts/risks, how expiry prices are calculated, and what happens if the option expires directly on the strike price. Above all, be aware of all risks before making trades.
 
 
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Risk Warning: Trading in forex and Contracts for Difference (CFDs) is highly speculative and involves a significant risk of loss. Such trading is not suitable for all investors so you must ensure that you fully understand the risks before trading.
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