Understanding Binary Options – 3 Types of Options You can Invest In

If you are interested in entering the stock exchange market in the near future, then you should definitely choose binary options because of its so many impeccable advantages. As it is suggested from its name, there are only two possible outcomes in binary options. You either finish in the money (or profitable) scenario or out of the money (zero return) scenario. There are a lot of traders who have benefited from this type of trading. This is because this form of virtual trading is extremely beneficial and easy to understand. You should trade binary options with a lot of caution in the beginning to get an idea about how to use these options.

Before getting started, you should have a good idea about this market. Here, I will give you an idea about three types of options available to you when you choose binary options trading:images

Range option

This option presents a preset lower and upper boundary. After buying the range option, you have to decide the volatility or the movement of the asset with respect of the preset boundary. In other words, you have to speculate if the asset will finish in the predetermined price range or out of the range at the time of the expiry of option.

It is easy to understand that you should choose “Out of the range” range options if you think that your chosen market (currency, commodity, stock) is very volatile and the asset value will cross the preset boundary. On the other hand, if you think that the market of your chosen asset is too complacent at the moment, you can go for “In the range” binary range option. In order for you to succeed and earn the stipulated profit, it is important that you have great prediction skills. Moreover, it is also important that you should have updated knowledge about the latest business news.

Being a constant news reader helps greatly in guessing the volatility of any market. Having basic knowledge about economics is also very important. If you are not equipped with right knowledge, then binary options will become like a gamble for you. You might make a lot of money at one time but might also lose a lot at some other.

Touch option

Touch options is also called one touch option. It is a type of option in which you have to predict if the value of an underlying asset will reach or surpass a preset boundary before the expiry time. If your prediction turns out to be correct, you will earn the stipulated profit. You will lose your investment if the fixed value is not reached and your prediction becomes false. You should definitely choose one touch trading option if you sense an increase in the price of a given asset. Although touch options are available for stock, commodities, currencies and indices, they produce best results with commodity and currency trading.

Above/below option

It is also known as high/low option and it is probably the easiest option available in the virtual financial market. You only have to choose if the price of your selected asset will increase or decrease during a certain period. Most of the times, the expiration time arrives within a few minutes or hours. The best thing about this type of option is that expiration period is selected by the investor himself. Above/below option is a highly risky but very profitable trade which is very easy to use. These options are also the most popular options available in the market.

All these options have different advantages. A great feature that is common to all type of options is that you get the outcome of your trade within a short period of time. If you are a smart trader, then you can get good returns on your principal in a short period of time.