Binary options trading is an exciting emerging field in the world of investing. As the name implies, there are only two potential outcomes in a binary options trading contract - win or lose. The way most contracts are structured there is a fixed payout for win (typically 75% profit plus return of initial investment), while the lose payout is typically around a 15% return of capital. Maybe a few numbers would help.
A successful $200 trade in a binary options trading contract would pay $350 ($200 initial investment plus 75% profit), while an unsuccessful trade might pay $30 (15% of the original $200 investment). It does seem strange to receive a return of some capital on an incorrect action, but that helps make the market work - and really creates some interesting hedging opportunities. It's almost like getting a 'parting gift' on a game show, no?
There are some limitations on the available opportunities to participate in this market, as there presently aren't a wide variety of securities traded on it. On the other hand, those few securities which are traded on the binary options trading markets are extremely well known, highly liquid securities such as the US Dollar/Yen fx rate, Google, Nasdaq Index, and Microsoft.
One great aspect of this type of investment is the quick turnover rate of investments. Options expire hourly, meaning your investment payoff occurs within the same day - rather than the weeks, months, and years it may take to see a return in other forms of investments.
Another really great aspect of this emerging market is the low barriers to entry. It only takes $100 to open account - a stark comparison to the ten thousand dollars needed to open a traditional options account with your regular brokerage.