Binary Options Trading
Welcome to DWHM Trading, a premium resource for binary options traders. In a few quick paragraphs we will try to explain the basics of binary trading and offer you some insight on how this amazing type of trading works.
What are binary options?
Binary options, also known as digital options, are a special type of financial options. The main characteristic of digital options is that only two outcomes are possible (this is why they are called binary). The two outcomes of binary options are always opposite, so they cannot happen at the same time. Because of this, they are also called "two-way options".
Since they are very simple, binary options have become the most popular type of financial options, and every year more traders engage in binary trading. They can be described as bets on the market outcome, and they can generate a win when the option finishes "in the money" or a loss when it ends "out of the money".
How do they work?
In order to easier understand how binary options work, we will show you an example taken from the broker Trade Rush:
In the upper side of the box, you will see the "Asset" (EUR/USD in this sample) and the "Option Expire" time (in this case the option expires Today at 21:00).
In the main part of the box you will see a chart of the recent evolution of the asset, where a yellow line shows the "Current asset value" (at 1.30607 in this particular example).
The way the binary option works is very simple: if you think the "Asset value" will go up until the "Option Expire" time, you should buy a "Call" option. If you think the value will go down, than you should buy a "Put" option. In the above image, the "Call" button was clicked, so the right side of the box shows the details of buying a "Call" option. It shows the expiration date, the current rate, the amount to be invested in the option (here you can fill any amount between the minimum and maximum allowed by the broker) and the payout if the option expires above the current rate, and below the current rate.
As you can see in the sample, if the option is a winner you get a 81% profit, otherwise you lose the whole investment.
The binary options brokers will sometimes offer a refund when the option is a loser on certain assets. This refund can be as high as 15% of the investment, but when there is a big refund you can expect to see a smaller payout if the option is a winner.
How can I trade?
In order to buy digital options you need to open an account with a specialised broker, the same way you would need a stock broker if you wanted to buy stocks. This process is very easy and takes no more than five minutes. Binary options brokers operate online and you will be able to fully manage your account just from the internet. You don't need to personally go to the broker's office in order to open an account, and you can fund your trading account using your credit card or other convenient methods like wire transfers or online payment channels like Moneybookers or Neteller (also known as Ewallets).
If you want to find the most suitable broker for you, we strongly recommend you to check our binary options brokers section where you will find detailed information about the top five brokers. We have gathered all this information for you in order to help you make a wise decision when choosing the broker.
For regulatory information regarding options trading in the USA you can visit the CFTC site (www.cftc.gov) and for options trading in the UK you should check the FSA (www.fsa.gov.uk)