By Darrell Martin
When considering trading binary options, you may need a little help realizing that it is a simple concept. In fact, it is something you probably do several times every day. Let’s look at a few examples.
Will it be snowing at 7:00 a.m. for my commute to work tomorrow?
Will it be cloudy at lunchtime today?
Will I be tired after my workout tonight after work?
Will my prescription be ready for me to pick up at 2:30 p.m.?
All of these statements can only have two outcomes. Either it will happen or it will not happen. Yes or No.
Although it is simple, there is more to your binary decision making. For example, is snow forecast? Is it often cloudy where you live? Does working out energize you after a long day at work or are you exhausted? Is the pharmacy reliable in filling your prescriptions on time?
All of these other influences impact your simple Yes/No decision. In the above examples, the outcome can impact you if you dress warm for the snowstorm, forego the workout because you know you’ll be too tired, call ahead to check the availability of the prescriptions or enjoy sunshine or clouds at lunchtime.
Binary decisions are basically probabilities. You can use the same thought process to make yes or no decisions that are based on traded markets like Forex, commodities and US stock indices. Will the GBP/USD be above or below a certain strike at noon tomorrow? Your answer of Yes or No is a simple concept: It’s a probability!