1.1 Binary Options : Basic concept

Binary options are a financial derivatives instruments that challenge traders to foresee the right direction of the price movement for an underlying asset at a given point of time in the future. The Forecast horizon varies from a few minutes up to several hours.

To receive income for having defined the right direction, in which the price of an underlying asset happens to move, traders can use binary options instead of actually buying that asset. Thus, it is enough to forecast one of the two possible options — price increase or decrease. If the assumption is accurate for a given moment in time and asset price changes in the indicated direction, traders gain. And otherwise, they lose.

Any trading pairs that are composed of quotes (currencies, indices, stocks, metals, minerals, oil etc.) may be considered as basic assets for binary options.