Many business enterprises have shifted their focus to the web market over the last decade. Today, the Internet serves as an avenue for all sorts of commerce. Binary option trading is one of the newer moneymaking opportunities available online. The number of sites offering this service grows in number daily. Keep in mind that just like any other business venture, this undertaking has its risks and advantages. Before you invest your hard-earned money in this trade, it is important that you learn as much as you can.
Basics of the Trade
The method of practice is what sets binary options apart from other ecommerce opportunities. It is different from ordinary trading in the sense that an investor does not have to own any assets. All you need to get started is an initial investment. The process that goes into it is straightforward - traders have to predict whether a certain asset's value will appreciate or depreciate. For example, when trading for Enterprise 1, you do not have to own any company shares. Instead, you gamble with your initial investment. What happens is that you sign a contract, and then try to forecast whether the shares of Enterprise 1 will increase or decrease. Your ability to determine the result will tell if your investment registers a loss or a profit.
History of the Trade
People who have just stumbled upon it think that the concept is brand new. Contrary to popular belief, however, binary options have been around for several decades. It only seems new because formalization of the trade only took place within recent history. If we were to discuss options trading in general, the practice has been around for thousands of years. On the other hand, the practice, as we see it today, dates back only to the nineteen-seventies.
Formalization of the trade took place in 1973 by the Chicago Board of Exchange (CBOE) and the Options Clearing Corporation (OCC). The process today adheres largely to the regulations set up by the CBOE and OCC.
Risks and Advantages
As with all markets, binary option trading fluctuates. This should be the deciding factor as to how much money you invest. Of course, the general rule is not to invest money you do not have. Some people fall into the trap thinking it is easy money. While it can be, there are still risks involved. Be wary of this fact. Do not throw in all of your money at once. Instead, familiarize yourself with the practice and invest little by little.
Risks aside, the trade also has its advantages. Most binary option trading platforms available are clear-cut and easy to understand. Some platforms, however, are more intuitive than others. Keep this in mind when choosing between options. If the broker offers demo software, give it a shot. See if the program interface works for you.
Additionally, consider a broker's payout percentage. It might take some effort, but finding one that offers maximum payout will be beneficial. Remember that the average rate is seventy to seventy-five percent for successful investments, but there are some that offer ninety percent of the initial investment. For unsuccessful trades, look for brokers offering five percent at the very least.