Binary Options are the type of contract, where you need to predict the price movement of a chosen asset. By assets we mean indices, such as Dow Jones, FTSE, S&P 500, currency pairs like USD/EUR, USD/GBP, commodities, such as silver, gold, oil, and stocks of the biggest companies in the world like Google, Coca-Cola, Apple, Samsung. So, technically you need to predict if asset prices will go up or down after a fixed timeframe (60s, 10min, 24h etc). Binary Options have only two outcomes: win/lose, that’s why whole financial instrument is called “binary”.
You can substitute all terms from Binary Options and apply them to Sports Betting. The betting industry is much bigger at the moment, but the working principle of those two industries is almost the same. In sports betting you need to predict if Team A wins against Team B, and in binary options you need to predict if asset price A will go up or down. When betting you use your knowledge of teams and their past performance to predict the results and in binary options you use fundamental/technical analysis or financial news. For example, if Google would announce a takeover deal of Apple, would asset price of Google go up or down? We can confidently say that it would go up, meaning you could easily earn money by “betting” on the news outcome.
Now, when we have roughly explained the principle of how binary options work, we want to tell you more facts about the industry and what you should be aware of before starting your journey as a trader.
Facts about Binary Options:
- Founded in 2008 (after approval by the US Securities Exchange Commission)
- Regulated by CFTC in the US
- More than 100 binary options brokers online
- Minimum deposit $10
- Minimum trade $1
- Up to 92% profit from each trade
We would like to suggest starting your binary options journey with a demo-account, which you can open with a wide variety of online brokers. When you feel more or less confident you should open a real account, but don’t rush as with binary options you have very high risk of losing everything. Binary Options is not a simple financial instrument but is could be very profitable in the long-term.
Which broker you should go for?
There are hundreds of binary option brokers available on the market. Make sure to choose a broker which is regulated by either CySEC, FCA or CFTC. The only broker which is legal to operate in the US is currently Nadex. The binary options market is still very new in the US, so if you want your funds to be safe then go for US based brokers which have a CFTC license. There are good offshore brokers, but unless you live outside the US both we and CFTC would not recommend you to trade with them.
More information about binary options can be found on MrBinary.co.uk