If you are interested in this kind of trading, you have to know that binary options are estimates of underlying assets performance at a given time. First of all, the investors buys an asset and invests in it. The profit or the loss is coming with the movements of the asset value. So if the trader is selling the asset when its value increases he will have a profit. On the other hand if the trader sells the asset when its values decreases, he will have a loss.
Trading binaries requires constantly being in guard when to sell because you want to avoid losing to much in circumstances where the asset value decreases. There is a big difference in trading binary options because these kind of instruments are trades on the market, not in the market.
Binary options give you two chooses: CALL or PUT. When you predict that a price is going to go up and you want to invest, the investment is named Call option. When you predict a fall of a price the investment is named Put option.
A binary option can take shapes like:
- indices like Dow Jones, Nasdaq, FTSE, Nikkei and many others
- Forex. Here you can make various combinations of currencies like USD,EUR, GBP, CAD and many more
- Commodities like silver, gold, oil, coffee and many others
At the end you have to know that the transactions costs a lot of time, so you have to be prepared mentally and physically.