Trading in binary options has increased substantially in recent years. In an earlier era, binary options trading had to be done through a specialized broker who charged high fees for the service. Today, people can visit a binary trade website and process the transaction themselves, making it both simpler and cheaper to trade binary options for fun and profit. When you purchase a binary option, you are essentially buying the right to buy or sell a particular commodity at a pre-agreed price within a pre-agreed time frame. What makes the option binary is the fact that you either earn a high return on the binary option if it ends up "in the money" range of your purchase, or you lose the entire investment. There is no middle ground with binary options, which is why they are both high yield and high risk investments.
Different Types of Binary Options
There are a number of different ways to carry out binary options trading . The three most common ways are to purchase High-Low binary options, Touch-No Touch binary options, and Range binary options. With Hi-Low binary options trading, your objective is to determine if a commodity will expire above or below the original purchase price, within a range that is considered in the money. If you choose correctly, you receive a pre-determined return on the investment, which could be 70% over even higher. With
Touch-No Touch binary trading, you decide if the commodity will reach a particular price level at any point before it expires. If it touches the level, even for a minimal amount of time, you either win a substantial pre-determined return or lose your investment - depending on whether you chose touch or no touch in binary trading.
Range Binary Trading Options
The third category of binary options trading is called Range. With Range binary options trading . your objective is to decide of a particular commodity will be within a certain price range our outside that price range. As with the other types of binary trading, if you choose correctly, your binary option can earn you substantial pre-determined return or cost you your entire investment. Fortunately, there are tools available that reduce some of the uncertainty for people who want to trade binary options. For example, the famous Black-Scholes formula, which ultimately won a Nobel Prize in Economics for its originators, can be used to track the volatility of a commodity over time, helping predict what the likely price of commodity will be when the binary option expires. So it is possible to take some of the guesswork out when you trade binary options. But as with anything that involves predicting the future, there are no guarantees in binary trading, which is why the yield is so high when you choose correctly.