Introduction To Binary Options Markets Fundamentals
We could explain binary options with technical and complicated terms, as do other most authoritative sites, however, we know that the visitor who looks out for the first time in the world of binary options markets and start from scratch, don`t have the faintest idea what that means.
We hope to be clearer and more comprehensive than others, so as to clarify any elements of confusion, uncertainty or other problems with a simpler explanation. On the other hand, if you are reading this article is because you are probably still a newbie, with so many things to learn and understand.
Binary Options Markets Structure
Binary options markets are relatively new. They were liberalized in 2008 to make binary options more open and accessible to traders. In these markets, the method for making profits is a bit different from other markets. Instead of making profits with assets in favor of the trader for a number of pips, there are other ways to earn money.
The crucial point is that the trader receives a compensation composed of the invested capital and profits of the trade. But this is not all. The trader must be able to predict the results of the trade in certain, established time for the trade.
In binary options markets operates the following actors:
Brokers who are responsible to associate buyers and sellers belonging to opposite sides of a trade. It should be noted that in these markets, we don`t speak literally about buyers or sellers, as they are not being negotiated assets. These are contracts based on the price and on the behavior of the asset. The brokers make profit on fees charged for trades by both groups of traders.
Traders, who make profit and are paid from the money invested and lost by traders on the other side. The balance of payments in trading markets are such that, there are always more losers than winners, so payments to successful traders should never be a problem. If traders start having withdrawals problems with the chosen broker, beware. It`s very important for all actors in these fields understanding its operation. It’s worth knowing a little more about financial markets to which you are entrusting your money.
Types of Binary Options Trading
Binary options markets are not based solely on buying/selling assets, but rather on purchasing contracts for the behavior of assets in some modes.
For example, there are trades involving whether an asset will remain in the range or come out of the price range, it will move up or down, or will reach the price level. The following contracts are most common in binary trading markets:
Up / Down (also called Call / Put options): This trading method is the backbone of binary option trading. A put or put option is a contract between two parties to exchange an asset at a specified price (the strike), by a predetermined date (the expiry date). So it basically consists of three simple steps – selection of an asset, determination of the expiry time and the direction of the asset movement.
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