How To Trade Forex Binary Options
Forex binary options are a method of conducting trades using the different currencies available in the market. What makes this particular kind of transaction unique is that the investor is able to get a fixed payout as a return in investment if specific conditions are met. There are many benefits to trading in binary forex options. These range from giving a robust trading environment to providing investors with a flexible instrument to trade with. In addition, binary forex options are not affected by issues such as differences in prices. More often than not, it provides the option to use a platform that is simpler to use.
Above or Below Forex Binary Options
The most common means of trading binary forex options is through the “above or below” system. In this case, the investor is allowed to predict the base currency amount. The whole process usually has an expiry of a few hours, although it is not beyond the system to allow for as long as a month. The above or below system starts by listing the strike price which the market should surpass for calls or be under for puts.
Another kind of binary option for Forex binary options is the range. This system allows the trader to speculate if the currency chosen will be within the specific range. If the asset hits, or is within range, or misses, meaning it is out of range, the investor is entitled to payout. Some transactions demand that the ranges are precise and specific. The range can be set by the broker or by the investor. As for the payout, higher returns are recorded for hits that are further from the range while they tend to be lower for a miss. The time specified also factors into the amount of the payout. Usually, longer expity periods mean lower payouts for hits.
One Touch Option
Forex binary options can fall under the category of the one touch option. In this situation, earnings are made by the investor if the market touches a particular point at any time before the contract expires. There are two possible outcomes in this type of option. The first is that the range is breached and the investor is able to collect the payout agreed upon. The second is that the range is not reached and the trader loses all the premiums given to the broker.