For a better understanding of binary option trading, let’s have a look at some examples of binary options trades. Except the 60 seconds option you can always choose your expiry, be it a few minutes, an hour, a few hours, days or even weeks.
1. High/Low binary option trade
This is the basic binary options trade. All you need is to predict if the price will be higher or lower than it is at the moment you place your trade. In this particular trade you have to answer if the AUD/USD Forex pair will be higher or lower at 14:30 (2:30 pm), which is in about 10 minutes. If you get it right, you will make a profit of 85 %. It means that if you invest $100, you will make a net profit of $85 in just a few minutes.
2. Touch/No Touch binary option trade
This is probably the second most popular kind of binary options. In a way it is similar to traditional trading, because you are predicting that the price will make a certain move. The price has to at least touch a certain level before the option expires for you to make money.
This particular binary options trade is on the USD/JPY Forex pair. If the price goes down from 91.173 to at least 90.902 any time before expiry at 15:45 (3:45 pm), you will make a 350 % profit. If you invest $100, you will get back your $100 investment plus a $350 profit, which means a $450 total return.
You can also trade No Touch options. They are just opposite to Touch options. It means that you are predicting that the price will not touch a certain level before the option expires.
3. Boundary binary option trade
Boundary binary options are also very easy to understand. When you trade them, you are saying that the price will either go out of a certain range, or that it will stay inside. In other words that it will go outside certain boundaries, or that it will stay inside. Nothing else matters.
This particular trade above shows that you are predicting that the GBP/USD pair will not stay between 1.57435 and 1.57115, you say that it will quit this range and be out at 15:45 (3:45 pm). If you are right, you will make 350 % of net profit from your investment.
Boundary binary options can be also traded the other way, meaning that you will speculate that the price will stay inside the boundaries.
4. 60 seconds binary option trade
This is in fact a High/Low binary options trade with a fixed expiry at 60 seconds. You are just speculating if the price of a certain asset will be higher or lower in exactly one minute. You need it to be just one tick/pip higher or lower in order to make a full profit.
It this example you are trading the EUR/USD pair. If you buy a call option (up) and the price is in one minute at least on tick higher than now, you will make a 70 % profit. It means that if you invest $100, you will get back your $100 investment plus a $70 net profit.
60 seconds option are very fast, you can make a lot of trades in a day.