Those who are not afraid to gamble should look into binary options trading. It is a fast-paced, high-risk trading option that potentially gives substantial returns. The return of investment you get depends solely on your ability to predict market movements at a specific point in time.
Understanding Binary Options
The concept of binary options is simple. Options brokers offer you a variety of assets, and you find a specific asset you want to buy. You will then purchase a contract, which last as short as a few minutes to as long as a whole day. You must predict the market movement and determine whether your assets will rise in value or not. You will receive the amount indicated in your contract if you make the right prediction. On the other hand, you will lose around 85-100% of your investment if you make the wrong one.
You can only choose from two predictions, as the name suggests. Your prediction may be "in-the-money" or "out-of-the-money". Your prediction is "in-the-money" if your asset reaches a higher value at the time of your contract's expiration. It is "out-of-the-money" if your asset's value falls by the time your contract reaches maturity.
There are two types of binary options trading. Cash-or-nothing binary option will give you a fixed price, usually ranging from 150-185%, if your asset reaches the strike price. Asset-or-nothing option, meanwhile, pays you the entire value of your asset if you make the right prediction.
What are the risks of binary options trading?
People also call binary options an "all or nothing option." The main risk is losing all your investment if you make the wrong call. Some contracts allow you to get back anywhere between 5-15% of your investment, which is still a big loss. You must be adept at studying and predicting short-term market fluctuations before participating in such a trade.
There is another binary options solution for you to try. You can resell your assets to another trader. Some traders buy assets for a higher price before the contract expires. Reselling your assets at a markup guarantees a return of investment. It also removes the risk of losing your money in case your contract ends out-of-the-money.
Where can you find options brokers?
Doing a quick search online gives you a list of brokers offering this kind of trading. Make sure you inspect each service provider closely. Read reviews and ask your friends and family about online brokers they recommend.
Go over their policies before signing up for an online trading account. You'll want to look at their terms and conditions. Inspect the fees they implement on payouts as well. Some brokers do not pay in cash. What they do instead is offer lower prices when you buy your next asset. Make sure to clarify these details with your broker of choice.
Check the solutions each brokerage offers as well. Many options brokerages offer a range of trading tools on their websites. This could be useful if you want to engage in other trades. Finally, make sure the asset price movement chart on your brokerage's website matches that of real-time stock charts. Reliable brokers provide accurate information, but it will still be safe to double-check.