Financial fixed odds and binary betting (binary trading, binary options, digital options..etc) are somewhat of a niche financial product which trade on a definite outcome win or lose.
One example is to simply bet on whether a market will rise or fall the next day. There can only be one single answer to this – a yes or a no. If you believe the market you wish to trade will rise you can use what is called a Daily Up Trade / bet and this will in effect allow you the possibility to trade based on the market closing higher than the previous day’s close. If the market you are trading closes higher you win and if it closes lower then you lose.
You do not need to worry about stop losses like you would with financial spread betting or futures trading as the pricing is based on a scale of 0-100 so the maximum loss/payout is known from the beginning. The most you can lose is the price you opened the trade at and the most you can win amounts to the difference between the price you open the trade at and 100. Another popular aspect to binary trading is that like spread betting, futures you are able to trade / bet per point.
A Daily up bet for the FTSE 100 for instance can be opened as early as 5pm the previous day and closes at the close of the market you are trading. During this time binary price quotes will adjust constantly based on the present market prices but the binary trade price moves between 0 – 100.
If we opened a Daily up binary at around 5pm the previous day it is highly likely that we will be quoted a price of around 50-50. This in practice means it will cost 50 x whatever you risk per point say £1 as an example, so the maximum loss would be £50. The maximum win would be 50 x £1 per point or £50.
In the example above you only need to be correct 51% of the time in order to make money.