Binary Options – How they work
Binary options is the latest craze to hit the scene of private investment. An increasing amount of investors are turning to this new and exciting financial instrument, which have time and time again proven to be one of the easiest ways to make money online. Binary options continues to increase in popularity, and it’s safe to say the it has made a mark on the world of finance, with more and more brokers opening up for business ever day to meet the demand of traders worldwide.
So how does this actually work, you might ask yourself. Binary options is a quite unique form of trading as it offers a fixed payout on every trade that you make, which you will recieve if you are correct in your prediction. It’s not like forex trading or stock trading, where you buy and sell at different stages. To put it simply, binary options are not that different from sports betting. Instead of actually buying something, you are placing your investment on a predicted progression of a certain asset. Let’s say you think that the price of gold will increase in the near future. Instead of actually buying gold, you then invest in a binary option for gold. What the binary option does, is to let you place an investment, then choose a specified time frame, which can be everything from 15 minutes to a day or two. You will then decide if you think the price will have gone up or down from the time when you purchase the option to when the option expired. If your prediction is correct, you will get a payout of up to 80% of your original investment, and if you are wrong you will lose your investment.
The name binary options come from the binary number system, which is a system that only uses two numbers, 1’s and 0’s, which makes sense as a binary option only have two possible outcomes. DO (Digital options) and FRO (Fixed Return Options) are also used to describe this form of trading.
So why is it that binary options have become so very popular in such a short time? The answer is quite simple – It gives private investors a chance to quickly profit from the market fluctuations in a way that other forms won’t let you, unless you have a massive capital to usepared to stock holdings, for example, it is a much faster form of trading. In order to profit quickly from trading stocks, you will then require a huge capital in order for you to make a profit in such a short time, as a stock rarely rises with more than a few procent, meaning you will have to use a much larger amount of money in order to really profit from these small changes. On the other hand, however, there’s more risk involved in binary options, which is why it’s hugely important to know what you are doing when you trade binary options. It is easy to learn, but just like poker, it is hard to truly master. You will need to learn how to pick your moments in binary options, which is also the fun part of the whole thing!
For a new trader, binary options is really the perfect platform to start out from, because it’s so easy to learn. Just by reading this guide, you have already learnt the basics, meaning that you can pretty much just sign up to a binary broker and start trading. However, we do advice that you read through a couple of more guides in order to learn how to actually become succesful in the world of binary options. You could say that the less you know, the more binary trading is like gambling, and the more you know, the more you can use it as a safe way to generate income. Make sure that you pick up the habit of keeping updated on what’s going on in the financial world by reading the updates on this website and by reading financial news on other websites!