Binary Options Trading for Beginners
With people looking to make money wherever they can these days thanks to the credit crunch, in whatever form they can in order to make a few quid here or there to pay bills, go on holiday or just to save for the future, it can be difficult to work out the best route to go down.
You obviously have savings accounts and things like that, and then you have online auction sites that let you make money from the things you don’t need anymore or don’t want, but you’re somewhat limited in both the amount you can make and one is just a quick fix while the other is more long-term.
Today, there is a new type of investment that many people aren’t aware of, and that is binary options trading. Rather than paying for a particular asset itself, like buying shares in a multi-national corporation or a football club like Barcelona, you effectively bet on which way you think the asset will move in.
There are a lot of UK based binary options brokers as well as hundreds based in the United States, each offering a different range of options, but the best known terms are ‘all-or-nothing options’, ‘digital options’ or Fixed Return Options’, each of which stresses the 0 to 1 nature because there is, obviously, one of two outcomes – it either gains or loses.
Let me give you an example:
You choose to purchase a binary option in a cricket bat manufacturer, (not the most glamorous example for many I know, but work with me here!) You invest £100 into it with the opinion that at the end of that particular day the shares in the bat manufacturer will be higher than they started. If you’re right at the end of the day, you’ll receive a sum of money proportionate to the amount you invested and the trade options you were offered.
So what are the benefits of binary option trading in comparison to the more traditional form of trading?
Unlike the traditional form, you know before you invest exactly how much you risk losing if you are incorrect with your prediction.
You’re buying a contract and not the actual asset so the investments are actually much more affordable, bringing more trades within people’s price range.
You can actually make significantly more money from binary trading, as the profit is determined by the direction of the profit or loss, not the amount.