What Do Binary Options Mean? “Binary options” means, in short words, a trade where the outcome is a ‘binary’ Yes/No answer. These options pay a fixed amount if they win (known as “in the money”), but the entire investment is lost if the binary trade loses. So, in short, they are a form of fixed return financial options. So, you answered What Do Binary Options Mean? But How to Succeed with Binary Options Trading!
How Does a Binary Options Trade Work? What Do Binary Options Mean?
Steps to trade assets via binary options:
- Select the stock or equity.
- Identify the desired expiry time (The time the option will end).
- Enter the size of the trade or investment
- Decide if the value will rise or fall and place a put or call
The steps above will be the same for every single binary options broker. More layers of complexity can be added, but when trading equities, the simple Up/Down trade type remains the most popular.
Put and Call Options. What Do Binary Options Mean?
Call and Put are simply the terms of buying or selling an option. If a trader thinks the underlying price will increase, they can open a call. But they can place a put trade where they expect the price to decrease. Different trading platforms label their trading buttons. Differently, some even switch between Buy/Sell and Call/Put. Others drop the phrases set and call altogether. However, almost every trading platform will clarify in which direction a trader is opening an option.
Are Binary Options a Scam? What Do Binary Options Mean?
As a financial investment tool, they are not a scam, but there are brokers, trading robots, and signal providers that are untrustworthy and dishonest. The point is not to write off the concept of binary options based solely on a handful of unscrupulous brokers. The image of these financial instruments has suffered due to these operators. Still, regulators are slowly starting to prosecute and fine the offenders, and the industry is being cleaned up. But How to Succeed with Binary Options Trading and Avoid Scam
- Marketing promises enormous returns. This is a clear warning sign. Binaries are a high-risk/high-reward tool – they are not a “make money online” scheme and should not be sold as such. Furthermore, operators making such claims are very likely to be untrustworthy.
- Know the broker. Some operators will ‘funnel’ new customers to a broker they partner with, so the person has no idea who their account is with. A trader should know the broker they are going to trade with! These funnels often fall into the “get rich quick” marketing discussed earlier.
- Cold Calls. Professional brokers will not make cold calls – they do not market themselves that way. However, cold calls will often be from unregulated brokers interested only in getting an initial deposit. Proceed extremely carefully if joining a company that got in contact this way. This would also include email contact – any form of communication out of the blue.
- Terms and Conditions. When taking a bonus or offer, read the full terms and conditions. Some will include locking in an initial deposit (in addition to the bonus funds) until a high volume of trades has been made. The first deposit is the trader’s cash – legitimate brokers would not claim it as theirs before trading. Some brokers also offer the option of canceling a bonus if it does not fit the trader’s needs.
- Do not let anyone trade for you. Avoid allowing any “account manager” to change for you. There is an apparent conflict of interest, but these employees of the broker will encourage traders to make large deposits and take more significant risks. Traders should not let anyone trade on their behalf.
What Do Binary Options Mean?
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