What is Binary Options Trading?
Binary options are wagers in financial contracts that pay off either some fixed currencies amount or nothing at all. Traders purchase binary options when they think the price of an asset will rise or fall to a certain level by the time the contract expires. If correct, they could make an instant profit; if not, they lose their investment.
For example, let's say you think that Apple Inc. (AAPL) stock is going to rise in price over the next month, and you want to bet on that outcome. AAPL currently trades at $440 per share, and you're able to purchase a binary option that expires in 30 days for about $60. If AAPL stock closes above $450 at the end of the month, the contract will payout 100% profit, or $100—your initial investment plus an additional profit. However, if AAPL stock finishes below $450 at the end of the month, your $60 will be lost.
Rather than buying currency pairs and holding them for long periods, Binary Options allow traders to bet on currency movements without ever taking possession of the currency itself. As such, it appeals to professional traders who might otherwise trade currency futures or options.
What are Binary Options Forex Brokers?
Binary options forex brokers are online companies, which offer their clients the possibility of conducting binary options trades on financial markets. A binary option is a popular and rapidly growing form of trading for its high payout rates and low risks involved.
By current legislation, only those individuals who have reached 18 years of age can trade with such brokers. This is a measure of protection for investors, preventing such brokers from conducting illegal activities.
Binary options trading has become popular in recent years because traders do not need extensive education and knowledge to trade with this type of broker. However, since the binary option is an innovative form of investing money and is considered a form of gambling more than investing, there are often problems in becoming authorized with the companies that offer this type of trading.
Not all countries allow their citizens to trade binary options. For example, in the US, only firms registered with the Securities and Exchange Commission (SEC) can legally provide such financial services. Brokers who provide services outside of the US are not obliged to apply for a license but should be regulated by their financial authority.
Sometimes you can find binary options brokers from other countries as unregulated or offshore companies. The credibility of such brokers is often questionable due to lower standards and sometimes even from playing with your money.
As a trader, you should choose one of the registered companies on our website to protect your money. In this way, not only will your money be safe, but also financial transactions carried out online will be legal for both parties.