Binary Options Trading: Fast Profits In A High Stakes "Game"

Binary Options Trading: Fast Profits Or Fast Pain

In 2008, the Securities and Exchange Commission allowed binary options trading which paved the way for various stock exchanges to offer them in their listings. This scheme has since attracted a lot of attention because of its excellent earning potential. Numerous platforms can be used for this type of investment though some are restricted to retailers.
Binary options trading is simple enough that even those with little experience in the stock market can start right away. It works by having investors predict the future movement of a certain stock without necessarily buying the stock. They payment is all-or-nothing which makes it a challenging and risky proposition. If the guess on the performance is correct, then the returns are substantial and if it’s wrong then nothing will be received.

As a concrete example, let’s say a person puts his money on a binary option for company X at a hundred dollars. His guess is that the stock price will end on a higher note than the day before. If the events of the day prove him right, then he could get up to 71% in profits.

In our example, this profit will leave the speculator richer by $71 on top of his initial hundred dollar investment. On the flipside, a wrong guess would leave him with a mere $15 in his pocket. There are always two prearranged conclusions in binary options trading: the win and lose scenarios. This is why it is also called FROs or fixed return options in some circles.

The conditions do not change no matter what happens. At best, the values increase in direct proportion to the speculators’ bets. A person who wants to earn large sums quickly can use binary options trading platforms to his advantage. The potential returns are enormous compared to traditional stock markets.

Regular asset markets base profits on point differential between the initial and the final price as determined by market forces. Binary options trading goes beyond that, looking instead at set margins that does not depend on the degree of movement but just on the direction taken by the asset valuation.

Although binary options have tremendous appeal to speculators, their inherent risk requires investors to pause and think carefully about their choices. Once they have picked an asset and made a guess about its direction, they cannot halt the process and change their minds once they see the value going the opposite way at full speed. This can actually be arranged with a few brokers but resorting to such will ultimately yield less money.

Those who do choose to dabble in binary options trading will need to devise a strategic plan with regards to making their new investments. While it’s possible to go in and make bets without prior knowledge, the prudent long-term approach would be to study the platform and the issues that could affect the movement of each asset.