The Meaning of Binary Options
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The meaning of binary options is one that all binary traders (veterans and amateurs) should seek to understand if they are to make money from binary options trading. Contrary to most peoples assumptions, binary options are legal trades; they are not gambling games that are dependent on luck. Binary options must involve valid and recognized trading assets, such as stocks and foreign exchange. Traders must invest whatever amount of money they desired, as a bet, in order to predict the financial performance of their choice of trading assets.
Key Aspects of Binary Options
Trading Terms
All trading terms in binary options trading must be established and agreed upon by the trader and the broker before the trade. Some of the binary options trading terms include the start and the end of the trading period, trading asset(s), the amount of money placed as bet, the winning/losing terms, and the payout. Winning and losing is solely dependent on the performance of the trading asset in relation to the traders predictions. A trader wins when his/her predictions turn out correct, and loses when the predictions fall against his/her predictions.
Not all assets are allowed in binary options. Traders are, therefore, advised to ensure that the assets on the binary options platforms are authentic. The amount of money a trader invests in the binary options trade can be as little or as much as he wants, and it is not dependent on the price of the trading asset. Payout can be agreed as a percentage of the invested bet money or the whole amount. Wrong predictions end in the traders losing part, or the whole, of their investments.
Traders, Brokers and Regulators
Binary options regulating authorities, brokers, exchanges and traders comprise the binary options participating parties. Regulating bodies usually license binary options brokers, and ensure fair trading platforms and practices. Brokers refer to the parties that provide the trading platform to traders. Brokers must have a list of the trading assets for traders to choose; it is not a must that these brokers own the trading assets. In binary options, traders refer to the people who bet their money on the performance of trading assets, and who win or lose depending on their prediction.