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Home > Fundamental Concepts of Binary Options

Fundamental Concepts of Binary Options

Binary options trading has been around for a while now and is spreading in popularity throughout the world. More and more traders are joining in on this trading form as they are able to notice all of the unique advantages offered to them.

While this type of trading is ideal for entry level traders, there are certain elementary facts that you should understand about. This is the only way to ensure that your endeavor commences on the right note. In this article, you will find the fundamental concepts of binary options. It will provide you greater insight into what binary options trading has to offer:

There are Several Forms of Options

There are several options that you can utilize with each binary option trade. The most commonly used one is known as the Call/Put or High/Low option. This is when you just decide whether or not the value of a certain asset will increase or decrease within a certain time period. Call is tied with the price of an asset going up while the Put option indicates that the price will be dropping. This, however, is not all that is available.

Next in line, in terms of popularity, are one touch and no touch trades. One touch is when you decide that a certain price point will be reached by the end of the trade. No Touch is when you determine that a particular price point will not be achieved within the set time period.

Then there are boundary trades, which are also known as range trades. With this option there is a channel created between the high price point achievable and the lowest price point possible. In this scenario, you are establishing that the price of the asset will remain within these extreme boundaries.

The Trade Time Limit

The trade time limit with binary options trading is actually a common misconception. Most people simply assume that there are only short trades available with binary options. It is true that this form of trading offers some of the shortest trades. However, while short trades tend to be more popular, there are not the only ones that you can use. With binary options, short trades can be as quick as thirty seconds, with the sixty second trades being the most desirable ones.

The short trades can last anywhere from half a minute to a full day. There are longer trades as well, nonetheless. These can run from a couple of days to weeks, or even months. Traders face restricted time limits due to the brokers that they are registered with. There are some brokers that do offer traders greater flexibility when it comes to choosing their trade times.