Home Merits of Binary Option
When trading binary options, you only need to speculate whether after a given time a currency pair will be [High]er or [Low]er than the present rate.
After the option duration is expired and your prediction is correct, then you automatically earn the
payout % specified for that trade.
For example, the Dollar and Yen currency pair is USD/JPY and it is currently $1 = \100.000, and you predict [High].
After the option duration, if the rate becomes
$1 = \100.001, then your trade was in-the-money, and you earn the stated profits. Conversely, if the rate became \99.999, then you are out-of-the-money.
Just as simple as it sounds, you only need to predict [High] or [Low], making binary options very attractive for trading and investment purposes.
When trading with Forex, major rate movements immensely magnifies your losses, while at the same time with small rate changes it is difficult to earn measurable profits. With binary options, even with the smallest currency rate changes, you are guaranteed the profits shall your trade be in-the-money.
If you purchase 10,000 @ USD/JPY 117.560,
and then sell at 117.750:
*This invested amount is used to meet trader margin requirements.
*Amount is calculated as Purchase Rate × 10,000 × 4%.
If it is now 117.560 with a payout of 182%,
and you choose [High], with the resulting end rate being 117.750:
*If you chose [Low], then only your invested amount is the loss.
In the event that you predicted an incorrect trading outcome, the most you can lose for that trade is the amount invested in that trade alone. Unlike Forex, in binary options you will not lose more than the amount invested in that trade, therefore making it easy for beginner traders to manage risk.