The Binary Option

We hear a lot of discussion and speculation about binary options, but many people are still in the dark as to just exactly what it is. Let's lift the veil and take a peek inside at what this exciting and terrifying concept actually is and scare away the demons that are doing their best to keep mere mortals away from their spoils.

The similarity between the rawest basics of all computer programming and the trading concept that has prompted this article is at the heart of the mystery I'm about to demystify. I mean the binary system that is nothing more than the difference between the two numbers, 1 (one) and 0 (zero).

On or Off

The binary concept of using the two numbers to denote (in a computing aspect) a switch that has two points, those being "on" and "off" corresponding to those two important numbers is very simple to understand when it is described in these simple terms. It also corresponds to the affirmative and negative ("yes" and "no"), which forms the core of the human mind's decision making process.

binary decision making processThis makes it very easy to see how things come together. A computer in its most basic form is merely an array of switches that turn a small voltage on or off to represent one or other of the numbers "1" or "0."

And that, when transferred to a mathematical base 2 (binary) enables it to perform simple computations (calculations) that can then become progressively more complex as more switches, or zeros and ones are brought into play.

Decision Making Process

The computing model also echoes the human decision making process in that ultimately, the "end result" arrived at in every decision must be either a "yes, I'll do it" or a "no, I won't do it."

In all decisions, there can be no other outcome. Some may offer the "maybe" option, but if that were accepted as an outcome, the decision would not have been made, rendering it moot.

The same goes for a computer. It cannot arrive at any other result than a "1" or a "0" making its programming base absolute.

So now we understand the principle of the absolute decision result, how does this bring us to the main subject of this article?

What Are Binary Options?

Actually, the answer is as simple as that above. Here is a stock or foreign exchange (for example) trading process that looks to see if a stock value will be more or less than it was in a set time frame in the future than it was at the time the initial value was interrogated. The end game relates to whether the option will result in a fixed monetary payout or nothing at all.

So the basis of binary options is a simple, no-nonsense "yes" or "no" proposition as to whether an asset will be above or below a certain value at a certain pre-determined time. The trade is then placed on whether the answer is a yes or a no.

This makes it just about the simplest of all financial assets to be traded. There are a multitude of software packages available that claim to be able to predict the outcome of a predetermined set of trades with a high degree of accuracy, for which the creators and marketers of the software charge a fee for its use.

I won't go down that road of reviewing or assessing the merits or otherwise of any currently available software, since that is outside the scope of this article. However, you may learn more about some of the better packages that are in use by visiting this website page about binary options and reading its own reviews and descriptions that may be of some assistance in your own decision-making process of which on is best for your needs or which ones to stay away from.

Further information may be obtained from these resources: