The most common type. Traders predict whether the asset price will be higher or lower than the current price at expiration. A correct prediction yields a payout.
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Underlying Asset: The financial product you’re trading, such as a currency pair like EUR/USD, a commodity like gold, or an index.
While binary options share similarities with gambling—such as fixed outcomes and quick results—they are not inherently gambling.
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Binary options are a type of financial derivative that let traders speculate on the price direction of various assets, including stocks, currencies, commodities, and indices. The term “binary” comes from the two possible outcomes website of a trade:
Traders simply decide whether the asset’s price will be above or below the strike price when the trade expires. If the prediction is correct, you receive the fixed payout. If not, you lose your investment for that trade.
Why it matters: Regulated brokers operate under strict guidelines and are monitored by financial authorities, reducing the risk of fraud.
This is when the trade ends and results are determined. Expiry times can vary from as little more info as 5 seconds or 60 seconds to several hours, days, or even weeks. Choose based on your market analysis and trading strategy.
Clear Risk and Reward: Your potential loss is limited to your initial investment, and potential profit is known in advance.
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Why it matters: A broad range of tradable assets gives you more opportunities to diversify and apply different strategies.
Traders always know their potential profit and loss before entering a trade, making risk management easier and more transparent.