subject: A Powerful New Forex Strategy [print this page] Many investor are unaware of of binary options and their massive potential. Binary options are a brand new trading tool that is easy, cheap, powerful and fun. If you have been trading penny stocks, then read on to know why binary options can be a much better option. In simple terms binary options are yes or no bets on the future market direction.
For example, you can bet on whether EUR/USD rate will fall below 1.3570 or whether AUD/USD rate will rise above 1.0000. Now, if your bet comes out right and EUR/USD rate does fall below 1.3570 or AUD/USD does rise above 1.0000, you collect your original investment plus a profit. If not, you lose the original investment that you had made in the trade.
This payoff is $100 per binary options contract. And incase, your bet went wrong, you make $0 payoff.
Let's make it clear with an example. You might have been hearing a lot about the EUR/USD rate going up or down. Right now, suppose, the EUR/USD exchange rate is 1.2380. Suppose, you are confident that this rate will be 1.2430 in the next five days.
So, you buy one EUR/USD forex binary options contract for $7 that will expire in five days and has a strike price of 1.2430. If after five days, EUR/USD exchange rate is above 1.2430, you make $100 and if it is below 1.2430, you make $0.
So, instead of just 1 contract, you buy 30 EUR/USD forex binary options contracts with a strike of 1.2430. How much this will cost? As you bought one contract for $7, 30 contracts will cost $210. How much you make if the EUR/USD exchange rate ends up above 1.2420? You make $3,000 ($100*30). Isn't it nice!
The other possibility is that the EUR/USD exchange rate ends up below 1.2430 not above. You lose your investment of $210.
Trading binary options is a powerful new way to profit from the volatility in the market. Binary options are much better than investing in penny stocks.
