Binary Options have become increasingly popular amongst online investors over the last few years. The original binary options traders were generally shrewd people with considerable experience of online currency trading and offline investing. Disillusioned with conventional forex trading, they were looking for a simpler, faster investment process that allowed greater freedom of choice and flexibility. These investors were also attracted to the new binary options sites by the potential for high profits on each trade and the guarantee of commission free trading with no hidden fees. Binary-options quickly expanded from being a niche investment, restricted to people in the know, to being a widely recognised trading system.
It’s difficult to present a clear profile of a ‘typical’ binary-options investor. Binary options have gone a long way towards opening the financial markets to ordinary people and have almost ‘democratised’ online investments. Investors come from a huge variety of countries and represent almost every demographic group and income bracket. An investor could be a pensioner in the UK, a teacher in Australia, a small business owner in Japan; there are no stereotypes in binary options.
Despite their diverse backgrounds, binary options investors definitely share some common motivations and characteristics. Perhaps the underlying theme is a desire for financial independence. Most people would like to make more money, but never get beyond the stage of wishful thinking. Binary options investors tend to have the little bit of extra initiative, confidence and energy that is necessary to earn a second income. The concept of independence is a recurring theme in binary options, the trading process allows investors total independence with no reliance on old fashioned brokers. Traders have all the information necessary to make informed decisions about investments, and the complete freedom to invest as they choose, using a sophisticated trading platform.
Often times, binary options trading is not considered by some traders even though they might be buying and selling shares, options and stocks on a regular basis. In case you have heard the name but you are not familiar with it, then continue reading to learn how you can trade in this option.
To get started, you need to create a trading account with one of the binary options brokers. Binary option website has a number of reviews that you can read in order to decide on the right broker. You should know that it’s possible to work with a number of brokers for this trading option.
After setting up the account, you will be ready to decide on your underlying asset. It is best to choose a familiar asset and stick that market. For example, if you are used to trading in oil, you can stick with this market. One of the important things to point out is that this is trading tool that is designed to help you manage investments and generate high returns during a short time.
Now, you can conduct a thorough analysis on the market to choose an expiration time. You need to decide if it’s best to buy an option with an expiration time for an hour, one day or one month. Next, evaluate the course that your asset price will take towards expiration. A prediction for lower value would mean that you its best to buy a put option, while you would purchase a call option for higher value.
Take a look at the option that you select to determine if you can get a return on your investment. If not, choose the best option based on the data that was analyzed. More often than not, if traders predict the correct direction of options and they expires in-the-money this would yield a higher return up to 85% on the initial investment. In case you believe that the terms are satisfactory, you can buy the option for as low as $10 or up to $5,000. From time to time, the advanced traders will trade in multiple options to ensure that they are in-the-money. Binary options is said to be a good choice for beginners. This is because this type of trading is a lot easier for people who do not have the experience to predict movements in the market or maintain large accounts. The only thing you are required to do would be to determine whether or not a trade will get worse or improve during the period when you are holding it. This might not seem easy, but it’s a much simpler alternative for stock market trading.
This is how binary options trading works. There are options brokers who offer traders different assets. The trader finds their asset of interest and buys the contract, which might last for a month or for as short as a few minutes. The trader is expected to predict the direction in which the asset price will move by the time of expiration of the contract. If the binary options trading favours the trader, they receive the amount of money indicated in the contract they purchased. By making the wrong decision when predicting, you will lose anything between 85% and 100% of the money you invested in that trade. As the name suggest, binary options trading gives the trader only two options to choose from and these are; the price will go up or down. You will find terms such as “in the money”, which means your prediction was right. If you predicted that the price will go up or down and you ended up being wrong, the term used is “out of the money”. The payment comes after the contract matures and it does not matter by how much you lost or won, what matter is if the price went up or down in relation to your estimation. Binary options trading is not without its fair share of risks. This trade is often referred to as all-or-nothing which means you wither get paid or you lose everything. Some brokers are fair to give a refund ranging from 5% to 15% but losing up to 85% of your investment is a big loss anywhere. This means that binary options trading is just like gambling, you either win everything or lose everything. If you are interested in binary options trading, then you should start by finding a good broker. Brokers offer platforms that traders can use to bid on asset prices and they provide details and information to assist the traders in making informed decisions. Even with this, it is important that traders go out of their way to find as much information as they can to predict the asset price movements correctly.