Recent years have seen a considerable increase in the popularity of binary options as a new and lucrative investment opportunity. Binary options are much simpler and easier to understand than other traditional trading options, but despite this there is still some confusion surrounding the topic. This post will give you a basic understanding of how binary options works, as well as the advantages this opportunity offers compared with other forms of investment.
What are binary options?
Binary options are a new and exciting investment opportunity. As the name “binary” suggests, they operate on an “all or nothing” basis, and unlike traditional trading, you don’t run the risk of losing more money than you originally invested. Because of this, binary options are rapidly becoming seen as a quick and easy way to earn money on financial markets and a great alternative to traditional trading.
With traditional financial trading, an investor would purchase a particular asset,and this is one of the main differences with binary. With binary options, instead of purchasing assets, an investor simply speculates on which direction they think an asset will move within a given timeframe – this could be an hour, day, week, or even month.
At the end of this set time period, if your option has moved in the direction you speculated and settles in the money, you will receive a pre-specified pay-out. On the flip side, if your option settles out of the money and doesn’t move in the way you estimated, you receive nothing. However, some companies, such as anyoption, will actually offer a small return of 10-15% even if your options ends out of the money.
What are the advantages of investing in binary options?
Simplicity – Making money on binary options can be done by simply estimating the direction the option will move in. With traditional options trading, investors are speculating on the actual difference in price, which can be much more difficult to predict. Less knowledge of the assets is needed with binary options, making them a popular choice with less experienced investors.
Investing in binary options has been made as simple as possible by brokers, speeding up the entire process. All an investor is required to do is pick the asset they want to invest in, choose an amount to trade and which direction they think it will move in, and then the expiry time they want to wait.
Limited, controlled risk – Lots of people are put off traditional options trading due to the perceived risk involved, especially for beginners with minimal trading knowledge. Due to the “all or nothing” element of binary options, as an investor you know exactly how much is at risk – you cannot lose more money than you originally invested. Binary options can also be traded using much smaller amounts of money than traditional options, meaning that you can invest as much or as little as you wish. You will usually be told the amount you stand to win before trading, making it much easier to calculate your investment and potential loss or gain.
Big rewards, fast – With binary options, you can expect to see a return on your investment much quicker than with traditional trading, sometimes within as little as 10 or 15 minutes. You can also expect to see returns of around 65-70% on your investment, whereas these figures can be much smaller with traditional options.
The simplicity and short timeframe, combined with low risks and large returns, means binary options are an excellent way to make quick money.
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