Binary options can be described as options in which a trader has to vote yes or no on a given financial asset’s price. This could mean a huge payoff or nothing and the value of an asset is evaluated during a specific time frame. Since the concept is so simple, these are easier to understand and deal in than a traditional option.
In the case of most types of investments, an investor buys the shares of a company and whether they make money on it is determined by its change value. If the investor decides to sell it when the price goes up, he makes a profit. If he decides to sell when the price is lower, then he loses money. This kind of investment can be worrisome as he has a lot of money in the market. Binary trading is far simpler. Futures are traded on the market – basically, investors are trying to predict the movement of an asset in a pre-set time frame.
In options we trade futures on the market and not in the market like other trading methods, and thus the amount of psychological stress isn’t expressed, as you are just predicting the asset’s movement for a predetermine time frame. watch the video to know more!
Assets traded in Binary Options
There are several categories of binary trading contracts available to investors/traders. One can trade in:
- Indices like the FTSE, NASDAQ, Nikkei, Dow Jones, etc.
- Foreign exchange in which major world currencies are traded in pairs like the USD:EUR, GBP:JPY to name some
- Commodities like crude oil, wheat, silver, gold, coffee and so on
- Stocks of some of the biggest companies in the world like Google, Coca Cola and others
A binary option trading is quite a complex process as it requires in depth knowledge of the market. Just like any other business model, people cannot generate a lot of money by trading for just a day. It takes a lot of work in the form of research, planning and patience to make inroads. Binary trading offers a lot more advantages to investors – it is simple but requires a lot of knowledge about the health of a company to place bets.
It also requires a feel for the market – traders have to figure out what direction an asset will take in the short term. Since binaries are investments in the short term, it offers the opportunity of earning profits of up to 85% during the course of a day. Binaries also offer a trader the freedom of choice – they can pick any assets across a wide range and make money.
Achieving financial freedom
Anyone getting into the trading market can make money – it takes patience, skill and intuitiveness to an extent to make good decisions on the market.
There are just a few exchanges in the US which offer investors the opportunity to trade. Traders have to become members and they can help investors to work with them. Knowing transaction costs ahead of time will help traders make more money.