How Payouts In Binary Options Work -

How Payouts In Binary Options Work

Binary options are the subject of trading, such as stocks are. However, the main difference between these two major types of trading is in the payouts.

The Everything or Nothing Rule As Payouts In Binary Options

Binary options are called binary because the Payouts In Binary Options can either be everything or nothing. Of course, nothing is not always equal to zero as in some trading platforms the nothing is a preset, lower amount of money. The so-called everything is when you earn money, thus gaining profits. We’ll now explain when you get money and when you lose it, with binary options trading.

Win or loss? In or out of the Money?

In binary options, two terms are very important. One of them is in the money and the other one is out of the money. To put it out simply, you generally win if you’re in the money and lose when you’re out of the money.

Binary options payouts are calculated according to the money you invest in trading, based on being in or out of the money and then based on a payout percentage. Different trading platforms all have different payout percentages.

Let’s take a simple example. I consider investing $200 in binary options. Then, with my right guesses, I end up in the money with a payout percentage of 75%. This means that in the end I have $200 + $150 = $350. Another example would be that I invest $300, end up out of the money with a payout percentage of 2% (notice that this “nothing” is a little something in this example), having $300 + $6 = $306 at the end. However, this does not mean that you can’t lose money. The only advantage (if we can call it an advantage) of monetary loss is that no leverages occur, meaning that you can’t lose more than you actually invested.

Basically, the contract is in the money when the economic event happens (based on how the market puts its belief in that event). This can be determined by the last trade prices of the current binary option contract.

Monitoring trade performance

If you have ever traded with regular stocks, you already know it’s hard to follow the stock price fluctuations, the growths and drops prices suffered and then estimate the future fluctuations. With binary options, there is an expiration time at which profits or losses occur anyway. You can “assume” how underlying assets are going to move and then simply trade your binary options if you want to.

Risks are significantly lower

It is also important that with binary options payouts, you always know the payout percentages before starting to trade. That means that even if you’d lose the current trade, you have full control of the loss, so you can gather experience as you trade and minimize potential losses along the way.

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One Response to “How Payouts In Binary Options Work”

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