What is Binary Option?

Intro

Trading binary options is very popular these days due to easy trading and great profits. Many beginners are wondering what is a binary option and how does it work? In this paper we describe what is the actual binary option.
What is a binary option?

Binary option is one of the financial instruments where we can buy contracts from an asset and will benefit when the contract expires.

In the binary option there are only two possibilities of up or down, meaning we can choose whether the price will rise or fall when the contract expires from the asset.

What differentiates the binary option from another is in the binary option the profit has been set at the beginning of the trading. So we already know how much profit will be gained when the contract expires.

Average profit in the binary option is 80% -90% every time trading.
Example of binary option trading

Say I already have an account in the binary option broker that is IQ Option. Well from this broker I am trading assets of EUR / USD

I predict 5 minutes from now the EUR / USD currency pair price will go up, from their trading app I select up and put up the amount of money invested. When installing I will be shown how much profit I will get if after 5 minutes, the price of EUR / USD had risen. For example displayed 90% profit. Well then I enter the investment amount of $ 100. And I only need to wait 5 minutes from now, after 5 minutes I see it was EUR / USD has gone up from the price that was. So I got a profit of 90% of $ 100 that is for $ 90 in just 5 minutes.
What is an asset?

Assets are all instruments available in the market. Such as stocks, currencies, commodities and indexes.

For example, Google shares, Apple and other shares may be referred to as assets. gold, crude and other commodities are also assets.
What is expiration?

So in trading binary option, from the beginning of trading we determine how long we will hold the assets we have bought earlier. This is called a contract, well the choice of his period can be 1 minute, 5 minutes, 10 minutes even up to several days.

Well when the contract expires then it is called expired / expired and the broker will automatically close the asset position that we bought earlier and calculate how much profit.

An example is I buy a gold asset with a five-minute contract by choosing a price rise, well after five minutes then the contract will expire if the price at expiration is higher than the price when I buy it automatically affection benefit.