In classical binary options trading all you have to do is to determine whether the price of a stock or a currency pair will go up or down in a predetermined period. The Put and Call options stay at the core of the whole Binary Options trading process. That is why we will start with these two.
Binary Options is a type of options, the basic rule of which is to identify the future direction of the asset price. Consider that you trade on EUR/USD
As you can see in the right side, we have two large buttons: Put and Call.
Buying the Call option
If you consider that the EUR/USD quotation will go above the Strike Price and will end this way at the Expiry Time, then you should buy the Call option and you will have a predetermined profit in case your forecast is correct. Now let’s see what are the Strike Price and the Expiry Time.
The Strike Price is the price of an asset which was at the moment of entering the Binary Options market. In other words it is the current price that moves continually and once you buy Call or Put options, it becomes the reference that will determine your profit or loss. On the image above you will see that horizontal line representing the strike price.
The Expiry Time is the period that defines when the option contract ends. In our case it is a 60 second trade, but you can set the Expiry Time to be an hour, a day, and get informed from larger timeframes, like M30, H1 or D1.
As you can see from the image above, we entered the market and bought the Call option. You can see that the Expiry Time is 60 seconds (1), the invested amount is $10 (2) and the predetermined profit is 88% from investment (3). The vertical red line represents the end of the option and if at that point the price will stay above the Strike Price, then our trade was successful.
Buying the Put option has the same principles, yet at this time the price should go down, which means below the strike price.
Now, why you should not trade binary options?
Most of the binary brokers out there are fraudulent and will exploit you until the balance reaches zero. You can read this material to understand that in many cases it is a scam:
You will see there how the brokers employ people who don’t have any idea about finance, how these employees become advisors and press clients around the world to make deposits, how the employees have fake names, biographies and stories, how the platforms use tricks to manipulate charts in their favors, how the brokers fraudulently assess their clients’ wealth in order to know how much they can take from them, and many other such things.
I hope this helps!