What is a binary option?

Binary Options Definition and How it Works

Binary Options are one of the highly profitable financial trading products with high risk made available to traders with small or large investment capacity. Binary Options have a potential to grow your account exponentially. Binary Options are a form of an option that provides a fixed deadline for expiration with a fixed payout. Binary Options trading only has two outcomes for any trade, WIN or LOSS. If you are successful in a trade you get up to 95% ( Amount to be credited to account for a successful trade ) return on your investment, but if lose , 100 % of invested amount is lost.

How to Trade Binary Options?

  • Choose your asset. (EUR/USD , GBP/USD , Facebook or Apple )
  • Make a prediction. ( that the price will move up or down in 1 minute or 5 minutes )
  • Select investment amount. (select $5 ,$10, $100 or any amount of your choice )
  • Trade (by clicking CALL or PUT – CALL , if you expect the price to go up )


  • If EUR/USD is trading at 1.05872 and you predict the currency pair will be lower in the next 5 minutes and you want to invest $100 ?
  • Find EUR/USD in the brokers asset list, select the time period of 5 minutes, enter $100 as your investment amount, click on the PUT (SELL) button and the trade is executed. The return on this trade is 90%.
  • You’ve now predicted that the currency pair EUR/USD will be lower than the current level of 1.05872 in 5 minutes time.
  • After 5 minutes EUR/USD is trading at 1.05852, lower than the price 5 minutes earlier,when you entered the trade. Your trade gets closed automatically by the broker after expiry of 5 minutes.
  • Since EUR/USD was trading lower as you predicted your trade is closed for a profit (known as in the money). The profit for a $100 investment with a return of 90% is $90 ($100 x 90% = $90) which is credited to your broker account in few seconds almost instantly.
  • If your investment amount had have been $1000 you would have made a profit of $900 on just this single trade.
  • There are different expiry times starting from 30 seconds to up to 5 minutes in Turbo Trading option.
  • Also, expiry of every 10, 15, 30 minutes, 1 hour and 1 day , end of day also available with all reputed binary option brokers.

Binary Options Brokers Review

Binary Options Brokers Singapore


Although Binary option trading is simple and very profitable, at the same time it is risky too. You may lose the invested amount completely. You would have lost $100 in the above-shown example trade if you were wrong in your prediction. If EUR/USD had closed above 1.05872, you would have lost the trade and your invested amount of $100.

Since you can not predict the price movement correctly all the time, losses are unavoidable. But you can manage the losses with proper strategy and money management. Hence it is very important to manage the risk in binary options trading, in order to be a successful trader.

Olymp Trade India

NOTE: This article/material is not an investment advice.