Binary options trading has a lot of rumors and controversy around it, but it is, in fact an easier and enjoyable form of trading. Especially if a person is new to the world of trading, as this is easy to understand.
In binary options trading, a trader bets on stock and either earns money if it matches within a certain amount of time or loses it. That is why it’s a risky but equally exciting way of earning money. There are just two options of ‘yes’ or ‘no,’ hence the name binary.
If the stock price does not fall on the correct side of the strike price within the expired time and date, then the trader loses the money. But if it does fall on the correct side, the trader gets a profit.
For example, if a stock is trading at $60, the binary option has a strike price of $65 and expires at 12 pm the next day. The trader can buy the option for $50. If, after the expired time, the money goes above $65, say at $100, then the trader gets a profit of $50 (100 – 50).
But if the money falls below $65, that is, it’s out of money, then the trader suffers a loss. Either way, it is good for practicing day trading as it helps in building an accurate intuition.
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