Paris, France -- (ReleaseWire) -- 05/16/2014 -- Binary options are a straightforward means of trading price variations in several international markets. A good trader should understand the perils and rewards of the often misinterpreted tools in trading. Binary options are way different from the conventional instruments. They have different payouts, costs, and risks. They have an entirely different liquidity framework and asset process as well.
When trading outside the US, one must also take into account that binary options would be structured not the same as the US exchanges binaries. In the process of hedging or speculating, there will be the so-called potential outcomes of “exotic options” and that binary options become an option. In fact, there had been warnings already released by the US Securities and Exchange Commission on the probable hazards when investing in binary options and being charged by a “Cyprus-based” company as they are beong sold illegally to US investors.
How Do Binary Options Work?
Binary Options are easy to use and its functions are quite simple. The “high-low” binary option or a fixed-return option provides access to stocks, indices, foreign exchange, and commodities. This option has a strike price of has an expiry date and time. When a trader bets accurately on the market’s direction and the price at the time when it expires is on the favorable side of the strike price, the trader gains a fixed return no matter how much the tool moved. Therefore, if a trader has an incorrect bet, there will be loses on his investment.
A “call” would be the bet if the trader deems that the market is rising. “Put” would be the decision if he believes otherwise. For a trader to gain on a “call” option, the price must be above the strike price when the time expires. On the other hand, for a trader to gain from a “put”, the price must be below the strike price at the expiry time. At the trade’s outset, all strike prices, payout, and risks are revealed.
How Does the Foreign Binary Option Differ from the US Binary Options?
Individual brokers are the ones offering the fixed payout and risk when using binary trading options outside the US. It is not the exchange who dictates it. So how do brokers profit from binary options trading? The percentage on the difference between what brokers pay out on winning trades and what they gain from losing trades would be their profit. It would not always be the case though. Binary options are being suspended until the expiry of the trading in an “all or nothing” pay-out scheme. Brokers who are not registered with a US regulatory body like the Securities and Exchange Commission of the Commodities Futures Trading Commission are not allowed to solicit US investors for trading reasons.
Listing for binary options for US residents were made available since 2008. These listings are being regulated by SEC for the protection of investors against “over-the-counter markets”. The purpose of this regulation is to provide full transparency and the chance for the traders to move out with or without any profit, any moment they want. Traders are given the chance to either enter or exit with the ebb and flow of the market. This way, how much would be the gain and how much would be the profit would be made visible to the trader at all times. In this case, binary options trading are made through exchanges requiring both buyers and sellers. So it would be the exchanges that dictates the profit and loss.
About Les Binaires
Les Binaires provides a comparison table designed to make it simple to browse and compare features to make it easy for investors to find the best binary trading options for brokers. Each company that has been included in the table has been traded by Les Binaires on real live accounts. Only recognized companies with proven worth and that they believe will continue to deliver a top experience for traders are included for consideration.