Forex & Commodities Trading - Against the Grain

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Binary Options, also known as Digital Options, is the trading of specific financial instruments within an allotted time span. The main differences from conventional trading are firstly the instrument is never actually held by the trader and secondly once the allotted time is up (meaning the trade has expired), the trader has either profited or lost but the trade is now closed.

To make things a little clearer, let's use Google shares as an example. Google shares, at the time of writing this article, are being traded at around 880.23. A Binary trade on Google would offer the trader a choice of whether Google shares would either go up or down. Within a Binary Options platform, the trader would see a graph representing the Google share price over a period of time, the current price and two buttons to the right of the graph. The buttons indicate the two choices of 'up' or 'down'.

In this example, the trader chooses 'up' together with an expiry trade time stamped at fifteen minutes from the execution of the trade. Fifteen minutes later, the trade closes. If the price is higher than 880.23, the trader has profited. If the price is lower the trader has lost. The first thing to bear in mind that, with all investments, there is an element of risk. Just as people make money trading, people can also lose money. The main differences between trading Binaries and conventional trading are as follows.

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