In this article I would like to learn more about instruments, which recently became available for RoboForex clients under the "options" project company RoboOption - binary options. Because many traders have questions regarding binary options, I propose to consider them more in details. What are the advantages of binary options over the traditional trading?

At-first, it is very important to note that the universal instrument does not exist, both binary options and classical forex trading have their pros and cons. Each trader can choose the instrument depending of his strategy, for some strategies more appropriate will be traditional trade (for example - classical trend system), for another (for example - trade near the support/resistance levels) – will be an advantage to trade on binary options.

What is binary option?

Binary option gives an opportunity to make a bid for an uncertain event or scenario, while knowing the parameters of risk and profit.
Let’s consider on the example of the simplest form of binary options – “call” & “put”.

Let's say you expect that in the next three minutes, the price of the chosen instrument, for example, EURUSD, will be higher than the current for at least 1 point, you will get fixed profit. This type of option is “call” (do not confuse with classical option “call”, the have another parameters).

If you predict, that the price will go down in exact date in future ( for example – after one week or more), and the price will be lower than current, in this case you can buy option “put”.

Some people think that binary options have been invented recently, and they have no analogues on market. However, even on Chicago Stock Exchange binary options are traded on Index S&P500 and volatility indicator VIX. Different structured products, allowing to get the profit from “the tangency” of corridors’ boundaries and other sceneries, existed on the OTC market long ago, but were available only for institutional bank clients till the recent time.