The choices available in the world of investments changes rapidly. Even though I work in this industry, I always learn about new investing options. The latest strategy I have looked into is binary option trading. Banc De Binary does a very good job at explaining how it works and, most importantly, how you can make money with it. The good news is that you don’t need to be a professional to trade these kinds of options. It’s actually easier than you might think.
What are binary options?
In short, binary options allow you to trade on an asset (equities, commodities, etc) based on your conviction that it will go up or down. The binary option platform gives you the risks involved and expected return if you trade successfully. Once you log into your account, the broker offers you a variety of options that are available. Each option trades on a specific asset and your potential return is listed. If you are right and the asset goes in the direction you thought it would, you realize the potential return. If you fail in your assumption, you lose the entire investment. The expected return is usually between 70% and 90%.
Is it about luck?
Trading any asset you’d like simply based on the fact you believe it’s going to rise or fall may sound like playing red or black at the casino roulette table, doesn’t it? While binary options were designed to be traded as a simple investment tool compared to conventional markets, it doesn’t mean it that it’s a simple game of heads or tails.
The idea is to trade based on research and economic news. Since binary options expiry length are concentrated on the short term (it could be as short as 30 seconds!), it is important you do your research about what is going on today. The advantage is that you don’t need to make research on the past 10 years. It is more about understanding in which direction the asset will go today based on what is happening in the news.
Do you need to be a big player to trade options?
Common thinking leads us to believe you must own hundred of thousands dollars in your investing account to consider options. With binary options, a small deposit of $250 is enough to start to invest. One of the big advantages you have compared to other type of investing accounts is that Banc de Binary doesn’t charge you brokerage fees. Fees are already included in the trades’ expected return. Therefore, what you make goes directly in your pockets and you don’t need to be a big investor to benefit from this investing strategy.
How much do you need per trade?
Investors may be reluctant to invest in a vehicle where you lose everything in a poor trade. The good news is that you can start trading with as little as $1 per trade. Therefore, you have plenty of room to practice and try different strategies without losing your shirt.
I think trading binary options could be an interesting avenue for a part of your portfolio. It is also a good learning platform where you don’t have to risk lots of money to learn.