Binary Options (“Binaries“) allow traders to speculate on the direction of a given instrument by using either an “UP” trade or “DOWN” trade within your preferred time period.
For example, you speculate that the EUR/USD pair is due to fall in the next hour and decide to place $100 ‘DOWN’ trade. If EUR/USD falls as you anticipated, then you gain 70 percent of your initial deposit. However, if your view is incorrect and the market rises, you lose your whole initial outlay.
If you already have a GO Markets’ live trading account and trade Forex with us, simply register yourself with this form to gain access to Binary Options and we’ll send you instructions on how to get started today.
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The return on a successful trade depends on the time to expiry (contract maturity). For example, a trade with a 30 min to 1 hour expiry will yield 70% with percentage return increasing to 75% for a trade between 5 and 15 minutes. It is important to note that in periods of low volatility, the percentage return may be reduced. The lowest return is 60%.
One of the benefits to trading binaries is your ability to understand your maximum potential downside from the outset, without unforeseen occurrences such as slippage. This means if you have chosen to trade to the value of $50, this is the maximum you can lose regardless of the market conditions.
One of the most popular style for binary trading is the “Up/Down” binary option which asks the question of whether the underlying market instrument that you’ve chosen to trade will be higher or lower at the expiry time.
For example, you speculate that AUD/USD will be above 1.5060 in 5 minutes. If at expiry, AUD/USD rises and is now quoted at 1.5065, then you make a profit.
The “Short Term” binary options are the same as the “Up/Down” binaries, however they are set at shorter intervals (less than 15 minutes).
While binaries may be deemed as ‘limited risk’ in nature (given the margin required is the maximum you can lose), it in no way ‘limits’ the traders ability to take multiple trades and sustain multiple losses.
Binaries are also very simple to trade, however, the movement of the underlying asset is often subject to very complex themes, which have an impact on the success of your trade.
As with all trading instruments, GO Markets urges our clients to carefully assess the risks associated.
GO Markets provide a tradable price based on the underlying spot (mid) price of a currency pair. Market volatility and the time until the contract expiry are two important factors which affect the rate of return. The price in which we provide on our platform, is set by GO Markets and not provided by an underlying exchange or an external liquidity provider. Because we set the price, we cannot offset or ‘hedge’ your position in the same way we can across other trading instruments (FX, Commodities and Indices). GO Markets are therefore exposed to the outcome of your binary trade. Unlike other types of options (such as exchange traded options), Binaries do not give the trader the right to purchase or sell an underlying asset.
Binaries are settled based on the mid-price at expiry. If at expiry the binary strike price is equal to our mid-price, for settlement purposes the outcome is considered a draw and you receive your initial outlay in full.