Binary Option trading is the trading includes the both the trading of binary and digital options. The options pay a fixed return if they are successful – a term referred to in the business as ‘in the money’, and will lose full investment if the binary trade loses. There are very few asset classes that cannot be traded via binaries, and the most popular to pick from include, the foreign exchange (referred to as Forex), commodities like oil and gold prices, stocks and indices, just to name a few. Binary trading simply refers to the act of buying or selling these different options.
Binary options are the best way for a trader to speculate on an asset price. If correct, they will payout a fixed return, but if not, all investment will be lost. For this reason, they are sometimes referred to as a fixed payout financial option. However, it is the all or nothing structure of them that gives them a ‘binary’ name.
Binaries are often traded over a variety of expiry times either ‘over-the-counter’ or on an exchange. The time frames can range from very short periods, which can be as low as 30 seconds, all the way up to very long periods which can be up to a year. Although they are a very popular trading option, they are a high risk, high return investment vehicle, and because of this, may not suit everyone.