What is Binary Options?
Binary options are tradable options that simply require you to predict which direction the price of an asset will move.
With binary options there is no requirement to predict the size of the movement; all that’s important is the direction of price movement.
If your prediction is correct when the option expires, you will be in the money. If your prediction is off, you end out of the money. With binary options, there are only two possibilities.
Binary options are among the most popular trading options available. All your potentials risks and possible payoffs you will known beforehand.
WHAT IS FOREX ?
Financial market is a market in which people trade financial securities, commodities, and other items of value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural products.
The forex market is the market in which participants are able to buy, sell, exchange and speculate on currencies. The forex markets is made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors. The currency market is considered to be the largest financial market in the world, processing trillions of dollars worth of transactions each day.
The foreign exchange markets isn’t dominated by a single market exchange, but involves a global network of computers and brokers from around the world. Central banks use their massive buying and selling capabilities to alter exchange rates through their open market activities. In many cases will do so not with profit in mind, but rather for any number of policy reasons.
Forex brokers act as market makers as well, and may post bid and ask prices for a currency pair that differs from the most competitive bid in the market.
In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions between them.
The term “market” is sometimes used for what are more strictly exchanges, organizations. They facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange.
This may be a physical location (like the NYSE, BSE, NSE) or an electronic system (like NASDAQ). Much trading of stocks takes place on an exchange; still, corporate actions (merger, spinoff) are outside an exchange. While any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange.
Trading of currencies and bonds is largely on a bilateral basis. Although some bonds trade on a stock exchange, and people are building electronic systems for these as well, similar to stock exchanges.
Forex Market Basics
Within the financial sector, the term “financial markets” is to refer just to the markets that are used to raise finance. For long term finance, the Capital markets; for short term finance, the Money markets. Another common use of the term is as a catchall for all the markets in the financial sector. Examples in the breakdown below:
• Capital markets which to consist of: Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof.
• Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof.
• Commodity markets, which facilitate the trading of commodities.
• Money markets, which provide short term debt financing and investment.
• Derivatives markets, which provide instruments for the management of financial risk.
• Futures markets, which provide standardized forward contracts for trading products at some future date; see also forward market.
• Foreign exchange markets, which facilitate the trading of foreign exchange.
• Spot market
• Interbanks market
The capital markets divide into primary markets and secondary markets. Newly form (issued) securities can be bought or sold in primary markets, such as during initial public offerings. Secondary markets allow investors to buy and sell existing securities. The transactions in primary markets exist between issuers and investors, while secondary market transactions exist among investors.
Liquidity is a crucial aspect of securities that are in secondary markets. Liquidity refers to the ease with which a security can be sol d without a loss of value. Securities with an active secondary market mean that there are many buyers and sellers at a point in time. Investors benefit from liquid securities because they can sell their assets whenever they want; an illiquid security may force the seller to get rid of their asset at a large discount.
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