What is binary option

It is an FX transaction that spread all over the world in the wake of the spread of the Internet in 2001, but there is a thing called “binary option” in the dealing dealt with that FX dealer.

That “binary option” is a transaction that predicts in advance as to whether the exchange rate has risen or declined after a certain time.

Actually it is not possible to say unequivocally because there is a rule like a rule for each type of dealer or transaction, but the basic idea is to predict in advance whether the exchange rate rises or falls.

To give an example, in the case of the relationship between the yen and the dollar, it is to predict in advance whether the yen is depressed or the yen is high after two hours.

“Binary” is a word meaning “two of ~” in English, so there are two choices of exchange rate “rise” or “descend”, so say like this.

Also, there are cases where it is displayed with only 0 and 1, 0 and 1 are binary notions, so it seems that it is sometimes referred to as “digital option” sometimes.

In ordinary FX trading, experience and knowledge are necessary as it is necessary to consider value flow etc.

In that respect, “Binary Option” only predicts whether it will rise or fall, so even beginners of FX can easily begin, which means that it will be hit with a probability of 1/2.

Also, in the case of “binary option”, if we get hit with expectation, we will receive the full amount, but if it is not predictable, it is supposed that 1 yen will not be returned.

By the way, in the binary option, we call this “payoff”.

Even if the rate reading is good, if it comes off, I will not come back as much as 1 yen so let’s prepare for it.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.