To those who are a little more fearless than most, you may want to consider binary options trading. Be advised, it is high-risk and very fast-paced, but there are huge potential upsides to it. Any return on investment will depend wholly on your knack for predicting movements in the market at a precise point in time.
Understanding Binary Options
Actually, the concept of binary options trading is easy. Your broker offers you a number of assets, and you pick the certain asset you wish to purchase. After that you buy a contract, which can last as little as minutes up to an entire day. You will then predict whether the movement of the market will make your assets increase in value or not. Should your prediction prove right, you will receive the amount your contract indicates. On the flip side now, if your move is the wrong one, you will lose anywhere from 85 to 100 percent of your investment.
As the binary name implies, you can only select from two predictions. You are either “in the money” or “out of the money.” You are in the money when your asset is at a higher value when your contract expires. On the other hand, you are out of luck if the value has fallen at expiration.
In binary options trading, there are basically two types. There is a cash-or-nothing option, which gives you a fixed price should your asset reach the strike price, sometimes as high as 185 percent. Now with the asset-or-nothing method, you are paid the total value of your asset if your prediction is correct.
As mentioned above, binary options trading is not without risk.
That is why it is widely called the “all or nothing option.” Obviously, the main risk is that you lose your entire investment if you’re wrong. There are some contracts that will allow you to receive a very small percentage of your investment back, but still. Your best bet is to make sure you are educated in predicting short term fluctuation in the market before engaging in binary options trading.
That said, there is another way to try binary options trading. That is by reselling your assets to another trader. There are some traders who will indeed pay a higher price for your assets before your contract terminates. Doing so at least guarantees some return on your investment. It also eliminates the chance of losing your investment if the contract ends out of the money.
By now, you must be asking where you can find good options brokers.
A quick internet search will give you a slew of brokers offering binary options trading. Do your due diligence though. Go through reviews and likewise ask family and friends if they know of any good online brokers.
Go through their policies with a fine-tooth comb before signing on the dotted line. Pay extremely close attention to their terms and conditions. Know what the exact fees are on payouts. Be aware too that some brokers will not pay you in cash. Instead, they will offer you a discount when you buy your next asset. Be certain that every detail is clarified with the broker you choose.
Look into the solutions each of them offer as well. Lots of brokerages also offer an array of trading tools right on their websites. This could serve quite handy if you choose to engage in more trades. Lastly, make sure that the movement chart of your asset price that is on your broker’s site is equal to that of real-time stock charts. For the most part, reputable brokers will give accurate info, but hey, it’s your money on the line so double-check.
