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Learn About Binary Options - Betting on a Price

Binary options are called that because they have only two possible outcomes. Either you're going to win (at which point you're "in the money") or you are going to lose (and be "out of money"). It is a way of wagering on the movement of an asset. Basically, you can place a bet on anything that is publicly-traded, whether it is stocks, commodities, indexes or foreign exchanges. What is critical to understand about binary options is that it doesn't involve buying an asset. In other words, there is no purchase of stocks or commodities involved. Rather, there is a prediction on where the price of that asset is going to move.

It is actually a very simple way to play the market. And there are some advantages to it, in the opinion of many. For one thing, the risk is controlled. In other words, whatever the "bet" made by the trader is, that amount is all he can possibly lose. Meanwhile, there can be a somewhat bigger upside by comparison.

Inasmuch as this is considered to be gambling by many, it would have to be one of the fastest-moving events in all of gambling, because these are very short-term plays. In fact, you could conceivably place a bet on whether the price of oil is going to go up or down within the next five minutes. That's how fast and furious binary options can get. There is a fixed duration for any of these plays. It could be a few minutes, or an hour, or a week. But whatever happens, it has to take place before the designated time expires.

This is the kind of thing a day trader would really like, if he or she were to drink a lot of Red Bull and drive it up a few notches.

It is your choice as to what asset you want to pick and what kind of binary bet you want to make. The lower the probability of something happening, the higher the potential payout. But as we mentioned, the risk is known, and so the downside is limited to what you make it. And that is one of the things that has attracted many people to this form of "betting."

In binary options trading, you are in a position to do very well if you are successful with trades, and people with some experience in observing financial markets may consider themselves to be in a better position to do well, since they figure they have more knowledge at their disposal. But really, there is a certain "democracy," if you will, associated with participation in this activity, since predicting what is going to happen in the next five or ten minutes, or even an hour, may not really come down to how much knowledge you have, but how much nerve you've got. And because the minimum trades are low, there is no real barrier to getting involved.

It's no wonder why this is something very exciting for people, and also no wonder why there is some controversy attached to it. Binary options challenge the accepted way of doing things, and opens up whole new vistas for people who are interested in making a different kind of financial bet.