All About Binary Options Trading - Are They Scams?
Many people do not have enough information on binary options trading and may think the whole process is a scam and a way for brokers to steal money. Unfortunately, there are some brokers that are not honest and can create mistrust amongst investors. To determine if binary options are a scam, traders who are interested in investing should always make sure that the broker is from a country that has a great regulatory infrastructure. Since trading binary options is the easiest way to trade products, it has become one of the most popular forms of financial investment. Most binary options are not scams and can be backed up by a broker with a great reputation. By using some of the brokers and sites that have been recommended at this site, traders will find a reliable broker that can help them begin valid trades and generate income. This form of trading is fully legal and is a fast way to begin earning a stream of income.
What is Binary Options Trading
Many people have been talking about binary options trading and discussing how they have made fast and easy money. For new investors, it is important to have a general idea of binary options before investing any real money. This type of trading is when a trader purchases a contact on an asset and predicts whether that particular asset will increase or decrease in value over a specified period of time. With a correct prediction, traders can earn a predetermined return on the investment. However, a wrong prediction will result in a loss. There are only two outcomes to these trades, which is why they are a simple and easy way to generate cash. Binary options assets can be commodities, currencies or stocks. Traders will make use of options to predict the value of the asset when it reaches an expiration date. These trades usually occur quickly and usually have an expiratory time of between one hour to one month. Since the trades occur quickly, it is possible to conduct multiple within a day and receive returns on all investments. However, there are risks and seeing as this is an all or nothing trade, investors will benefit from using a reliable and qualified broker to assist them when they begin trading.
How Binary Options Differ From Over the Counter Options Trading
When binary options first became known among traders, they were over the counter options, meaning that there were very few regulations in place. However, over the years, government agencies have begun to regulate binary options trades and they are now monitored and regulated strictly. The main difference between these and over the counter trades is that the latter is done between two private parties and there are very few limits and regulations involved. Binary options trading has become a huge thing in the past few years and with so many investors trading these, there was a need to begin regulating the options and setting laws and limits. When trading binary options, traders will be involved in the trading of assets which can include stocks, commodities and currencies. Due to the nature of these assets, there is now a need for regulation, setting binary options trades apart from the traditional over the counter trading options of the past.
Benefits of Binary Options and Ease of Trading
There are many benefits to binary options trading. The first is that this type of trading is very easy to do and is a perfect choice for a beginner. These trades usually result in high returns. Many traditional stocks must mature over a period of time, but with binary options, the return could offer between 75% and 81% in just a few hours. Another benefit is that this is a short term investment. Money will not be tied up as it is with the stock market. The results of the trade are often known within an hour’s time and the investor will then collect their return or pay what they owe from the bad prediction made. These types of trades also have a calculated risk and reward. The investor will know exactly how much money they will make because the return is predetermined. This is also true for the loss. The amount that can be earned or lost will be known before the trade is actually conducted. Another great advantage is that binary options have an advantage in volatile markets because they offer a safe way to invest. There is no chance of incurring a loss larger than what is already determined, so these are the safest investments for beginner traders.
Types of Options that Can be Traded
When trading binary options, traders will quickly learn that here are many options that can be traded. The most popular types of options include Up and down options, touch options, pair options and boundary options. The up and down options arte the basic options and these were the very first options traded. With these, the trader will choose between PUT, which is when they predict the price of the asset before expiration, or CALL, which is when traders predict the price of the asset will rise above the initial value when it expires. Touch options are a bit more complex and this is when a value is set and the trader will predict is the price of the asset will reach a certain level before it expires. There are Touch and No Touch options here. The boundary options are when traders must select between two possible outcomes when the asset expires. Pair options are fairly new and are only offered at select brokers. These are based on two assets that will be competing against each other, so the trader will choose which asset will perform better.