How to Gain Profit from Forex Binary Options

How to Gain Profit from Forex Binary Options

Submitted by adil on Fri, 11/23/2012 - 07:11

Binary options are among the easy as well as increasingly popular way to make profit from the financial markets. Basically, a binary option is a wager that establishes whether the security will close below or above a certain price. In case the trade is correct, he or she will receive a fixed payout, which will vary anywhere between 60%-500% or even more.

In this technique, an option is purchased at a set price which is referred to as strike price. When the Call is place on a particular option, it implies that option will have to close above the strike price so that the trader can make profit. In case of Put options, the closing price has to be below the strike price for the trader to make profit. You have to keep in minds that all the options have got an expiration time attaches to them. Thus, the expiration time of the closing price determine whether that particular trade is profitable or not.

Binary options have got several varieties with the easiest and simplest one being fixed-payout option, in which the current market price, is the strike price for a particular options. In case the trade expires, the trader is going to receive a fixed payout, which is generally 60-70% of the initial investment. In case of a losing trader, the trader is likely to receive a credit of around 5-15% of the investment amount. The options that are mentioned here are typically hourly, however if you are looking for longer tem options than you will also find them.

Binary options are widely available for indexes, forex, stocks as well as commodities; however, forex is more preferred as there is easy availability of the technical analysis tools and chart data. You can use any form of technical analysis for trading the forex binaries. The fundamental news events like interest rates and unemployment numbers allow for much easy forex profits. Some of the basic strategies for trading binaries include trading news events, strong trends, trading on reveals near resistance and support.