Binary options, having emerged as an accessible potential tool for Forex traders, has brought hope and cheer to the market as a whole. Although some people like to relate binary options in the realm of the exotic options (options with more complex features), in fact, they are a simple way of offering a compelling method for investors and traders to cut their risk in a situation where the payoff works out to a fixed quantum on an asset or nothing at all. Today, many dealers consider the binary option as a unique way of short time profiteering on a range of economic assets that include the Forex. Trading popular currency pairs of binary options sites have seen people run up profits of even 80 % in a period of less than an hour by conveniently trading options that really represent leveraged security. Bear in mind that these options can inflate your profits and losses as well.
In the current scenario, most experts prefer to equate the binary options to plain vanilla options like the “call” or “put” options that you characterize with mechanisms like strike price, expiration date and premium for opting for the position. However, unlike the regular options the traders opting for binary options have a clear fixed payoff. Here you are gambling on the possibility of hitting the strike price within an expiration time. Accordingly, on a fixed payoff of $100, you will get nothing if the price fails to hit the strike price by the time of expiration and if the price hits the target, you will get the full $100.
You can now access binary Forex options on the Nadex or the North American Derivatives Exchange that offers you options for currency pairs of JPY/USD, USD/EUR, CAD/USD, CHF/USD, and USD/GBP on a Weekly, Daily and Intraday expiration basis. Many innovative Forex players today use the binary options as a great substitute against stop orders to endure a period of market reversal, expecting it as a revive after a temporary setback. Timing the entry and exit of binary options is critical as a momentum signal as it offers a low-cost platform for facilitating Forex traders to select directions and opt for positions.