Binary Options enable you to trade a wide variety of instruments across multiple markets. Unlike standard
investment vehicles like stocks where you purchase an underlying asset and bonds, where you effectively
purchase debt, binary options traders neither buy nor sell the underlying asset. Payoff on a binary option trade is one of two things only: a fixed return if the option expires ‘in the money’ or a loss, sometimes the total of your investment, if the option expires ‘out of the money’.
Binary option trading is far simpler to learn than Forex or other financial instruments. While there is plenty of scope to learn sophisticated strategies and hone your trading skills to advanced levels, the basic mechanism of trading binary options is easy to learn, and brokers make the sing generally make the sign-up process quick and easy.
Essentially, using your markets knowledge and individual level of charting knowledge, you need only choose the financial asset you want to trade, decide your investment amount, select an expiry rate, and then make an informed prediction on the direction the market will move in
relation to the instrument you are trading, based on only two possible outcomes.
Binary options trades expire either what is known as ‘in the money’ with a successful trade or ‘out of the money’ with an unsuccessful trade. A successful trade guarantees the trader a
predetermined return on investment (ROI) which can be up to 91%. For the trader who predicts a trade incorrectly, he or she stands to lose up to 100% of their initial investment, depending on their broker. See our broker guide for more.
All financial markets carry risk and are subject to volatility. This is especially true in the forex, stocks, commodities and spot metal markets. With binary options, while you might be trading the same instruments, your investment carries less risk. This is because binary options traders are not subject to elements such as leverage, margin calls, slippages, price requotes and the like. So not only does this make trading binary options simpler, it makes it less risky in terms of your investment and exposure.
With most traditional investment portfolios, you will wait months or years to see a significant return on investment. Not so with binary options, which come with a large range of different, often short-term expiry rates. With these short binary options expiry times, sometimes as little as 60 seconds, returns can come fast and furious. Given that many brokers offer payouts of between 70-91% on a winning trade, and that you only have to be right 55% of the time to break even, traders looking to capitalize on short-term market trends have significant
potential to achieve substantial trading profits.
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