What is Binary Options Trading? Analysis of Features, Benefits and Pricing.
Binary options trading is a form of trade that offers two options – either the price of a particular asset goes up or down, and you have to guess which direction the price moves in a specified time. It first came as an over-the-counter trading system in bourses and stock exchanges. The Internet has ushered in its widespread popularity starting in 2008.
Even if you are not a market trader or financial specialist, you may have already heard of binary options simply because of its phenomenal growth. Although binary options has long been in existence , it wasn’t until the development of online platforms that binary options trading became popular.
Assets here may refer to major currencies, commodities, stocks, and indices that are freely traded in the world market and national exchanges. What is binary options trading but a type of investment; a financial instrument where you place a certain amount/investment on a particular asset and if its price goes to where you predicted it will be, you get your payout – your investment plus the promised percentage earnings offered by the broker. You’ll be using the services of binary options brokers which will provide you the trading platform and tools as well as any other assistance that you may need.
Sounds easy, right? It is, but you will be forewarned by binary options brokers themselves that this type of trading carries a high level of risk and may not be suitable for all investors because there is the real possibility that you may lose all your invested capital. Binary options is also called an "all-or-nothing" trading because if you make the wrong prediction, it’s goodbye to your investment, all of it. While some binary options brokers return a small portion of your investment even for trading losing trades, you’ll still be advised that you should never invest money that you cannot afford to lose.
In this article, we’ll examine the many aspects of binary options trading, including the following:
What does binary options trading do? Why use binary options trading? How does binary options trading work? Advantages of binary options trading Cost of binary options trading Examples of binary options brokers.
What Does Binary Options Trading Do?
What is binary options trading but a means for you to earn more. The purpose of binary options trading is basically to give you the opportunity to profit off your investment in the right and legal way. There are several common attributes and features of binary options. Understanding them will answer the question – what does binary options trading do? Here are 6 aspects to know before taking part in binary options.
It’s simple. Binary option is a simple financial product which allows an investor to determine the future movement of an asset’s price which is just one of two directions – up or down. Underlying assets vary. Assets can be world currencies (USD, EURO, AUD, etc), stocks (Google, Microsoft, Apple, and many others), commodities (gold, silver, oil, agricultural produce), indices (index funds, futures, other derivatives), and lately cryptocurrencies (Bitcoin, Litecoin). Some brokers can offer you hundreds of assets that you can trade in. Trading is fast. Short-term timeframes can be as little as 30 seconds or 60 seconds to work your traded amount. This is riskier although you can make money quicker since you can trade multiple times in a day. On the other hand, you can opt for longer timeframes (minutes, hours or even a month) which generally gives bigger payout. You need a broker. You need a binary options broker so you can open an account with them, use their trading platform, avail of their tools (demo account, historical charts), and rely on their customer support and services (i.e. payment processing, withdrawals). Payouts vary. Payouts for correct predictions differ from broker to broker but are usually in the range of 70% to 90%. This means that if you place a trade for $100, you get $170 or $190 in return. For a wrong prediction, you lose all. Now you know how vital it is that you hone your skills and learn to make the right predictions which we’ll tackle in the next sections. Go for legitimate brokers. A most important reminder when it comes to choosing a binary options broker – get a legitimate one. A highly popular trading mechanism used by millions of people worldwide is bound to produce fake, fly-by-night brokers out to dupe unsuspecting investors. And there are many of them out there. Be fastidious in your research and background check to see, among others, if the broker is licensed and regulated by the proper government authority; has a professional and modern website complete with relevant information (office address, contact numbers, email); offers several payment/withdrawal methods (payment gateways, credit cards, wire transfers); boasts of having received awards and honors; and generally have good feedback/comments from users and clients. All these you can search online. If you find red flags, stay away. You’ll be entrusting your investment; hence it is paramount that you transact only with a real and reputable broker.
Why Use Binary Options Trading?
After reading the preceding section on what binary options trading do, you might be prompted to reply – why not? We’ll reinforce that positive response by showing you the distinction between binary options trading and conventional day trading or investment in forex and stock trading. Later in the article we’ll enumerate the advantages of binary options. But first, why use binary options trading? Why not invest in traditional trading? The two are different as far as the following are concerned: risk factor, profitability, assets handling, sustainability, and the learning aspect. Let’s go over each.
Lower risk. Every investment using a financial instrument carries with it some risks; the levels just vary. In traditional trading, wins and losses are dependent on the rise and fall of the value of an asset. You can lose a considerable amount of money when that value drops significantly or vice versa – profit big if the value rises to a great degree. When you beloved this article and you would like to obtain guidance concerning
Auto Trading i implore you to visit our web site. Either way, you won’t know beforehand how much you’ll win or lose. It’s the other way around with binary options trading because you can tell in advance how much you’ll win or lose since you have put in a particular amount you’re willing to risk before you commit to a trade. If you placed in $100 for a 70% return, you know you’ll get $170 for a right prediction and nothing for a wrong one. No surprises with this trade since you know the risk you’re willing to go through. More profitable. Both types of trading can be profitable to a seasoned investor who relies on experience and
Auto Trading expertise. The edge of binary trading is when it comes to payouts. As you’ve learned earlier, binary option auto tradig the rates of payouts differ per broker; some can even give you 100% or more which means double the amount of your investment for a winning trade. In regular trading the profit rate can be up to 20%, and that is if you’re lucky. This means that in traditional trading you have to buy and sell very large number of assets or by volume if only to realize more profits. According to a 2014 Optimove statistics, binary option traders have a conversion rate 34% higher than forex traders. Simpler assets handling. This is a major difference between binary options trading and trading in forex or stocks.