Binary options are an innovative and relatively new way of trading options. The name comes from the fact that there are two possible outcomes (up or down, “in money” or “no money”), hence the name “binary”. The idea is to predict which way the asset will go over a given period of time. For example, you can predict that USD / EUR will rise to 1.35 in 24 hours. When it reaches this level, the possible return is perhaps 85%. If this fails, you will lose your investment, but many brokers will return you a small portion of up to 15%.
Binary options trading is based on research and a certain amount of knowledge about traded assets. While you don’t need to be an expert, any knowledge definitely helps manage your risk. The online platforms that are available today make it easy to trade from anywhere in the world if you have an internet connection. All the necessary information and research is also available online.
Binary options can be traded on stocks, stock market indices, Forex pairs or commodities. Binary options trading is simple and can be profitable with an affordable quick profit, but nothing is true and losses can also be made.
For starters I would advise to learn everything you can about this form of trading. Learn and give yourself the best chance. Greg Davis has written an excellent e-book detailing his binary options strategy, and it is suitable for both the new and experienced trader.
There is some terminology used in binary trading and you will find it helpful to know. If a trader thinks the market is going higher, he buys a “call”. If a trader thinks the market is going lower, he buys a “put”. For a call to earn, the price must be higher than the strike at the time of expiration. In order for a put to make money, the price must be lower due to the strike at the end of the validity period. The strike price, expiration date and payout are determined at the very beginning of the trade. (I’ll add the full glossary later).
One of the benefits of binary options trading is that the risk and profits are known from the beginning. It doesn’t matter how much the market moves for you or against you, you win a fixed amount or lose a fixed amount. Since you never own the assets you “trade”, you have no liquidity issues. One drawback is that you have to be right in over 55% of cases to make money from many brokers.
Thus, binary options are a new and innovative way to speculate on stocks, Forex, indices and commodities, but they have pros and cons.
However, you can increase your chances of success through smart research and implementing a good solid strategy similar to those discussed in Bully Binary Options. (There is a money back guarantee, so you really have nothing to lose but time checking his methods).
Binary options are a fun and fast way to make extra money, but be smart, otherwise you may lose and it’s not satisfying !!
See you next time – happy bidding!