Five Things you should know about Binary Options
It is human nature that people are always looking for ways to increase their wealth. In 2008 the SEC approved the binary options trading that is now giving investors throughout the US the chance to make money. Using this type of investment the trader can expect to make around 80 per cent profit on his initial investment if the trade expires as he predicted.
Binary Options – Put and Call Options
There are two different options available: Call (buy) and Put (sell). If an investor chooses the call option he/she has the opportunity to purchase an underlying asset as the value increases, while the choice of a put option means the investor is expecting the underlying asset to decrease in value. Binary option trading allows the trader to make a call option that the Dow Jones industrial index will increase to 19000.30 by 13:00 EST, and if it reaches this level, it has expired in the money and the trader will make a large profit. However, if it does not reach the level it has expired out of the money and the trader loses their investment. The trader can however, make a put order that the Dow Jones will fall to 19000.30 and if this occurs the trader will make money.
Five things you should know about binary options
1. Binary option trading connects in real time to the major world exchanges by means of the internet.
2. You can trade in binary options from anywhere as long as you have an internet connection. There are no weekends or holidays which gives greater opportunity to make money.
3. Binary option trading differs from other types of investment as you either get 100% return on your investment or you get 0%. If you are successful you get 100% but if your trade fails, you get 0%. That is the reason that it is called all or nothing investment. There are some brokers however, who will refund between 10 – 15% on a failed trade.
4. There are a number of different asset types used in binary option trading. For example, NASDAQ, Dow Jones, and CAC can be used with the strike price being set hourly, daily, or weekly closing prices. Other assets that are traded include currency pairs, stocks, and commodities. Some stocks that are traded are Coca-Cola, Apple, and Microsoft. Gold, silver, copper, and oils are an example of the commodities on offer for trading. In actual fact the binary option trading market trades in all financial markets unlike the stock market that deals entirely in stocks.
5. Lastly, it is very easy t trade in binary option trading. Almost all of the major brokers offer a practice account enabling potential investors to learn before starting actual investing. This gives the opportunity to perfect your skills. While binary option trading offers trades in several indexes and assets, it is better to trade in the asset you feel more comfortable with.