The Advantages & Disadvantages of Binary Options Trading Intelligenthq
Binary option trading is an incredibly interesting topic. It’s also a fairly new way to invest; one that many newcomers are becoming interested in. So, today we’re going to talk about what binary option trading is as well as the advantages and disadvantages of this type of investment. So, let’s get right to it…
What Is Binary Option Trading
Binary options are designed to be a simple investment that can work well over both short and long term periods. They work a bit different than standard investment vehicles like stocks and bonds. Instead of purchasing a part of a company as you would with stocks, you’re making a prediction if the value of a company or other underlying asset will go up or down. That’s actually the reason binary options are named binary options. Unlike standard investment vehicles, with binary options there are only 2 possible outcomes. Either you end up in the money or out of the money.
Advantages of Trading Binary Options
Trading binary options can be a great experience for investors who take the time to learn the market before investing. With that said, there are several advantages you can count on when trading. Here they are…
• Fast Returns – With most investments, you’ve got to wait months or years to start seeing high levels of profits. When it comes to binary options, it’s possible to see returns in as fast as 60 seconds. As a matter of fact, most binary options traded have expiry times of 1 day or shorter.
• High Returns – One of the most appealing aspects of binary options is the high returns associated with the trades. In most cases, you’ll see return rates at 70% or above; that’s not something you’ll generally see in the stock market.
• It’s A Numbers Game – Based on the average binary options trade, you only have to be right 55% of the time to break even. Keeping this in mind, it’s easy to see that by doing your research and making smart trades, you’ll generally come out ahead. Think about it, have you ever predicted that the price of gold or oil would increase over a period of time? Where you right more than 55% of the time? Chances are you were!
Disadvantages of Trading Binary Options
Binary option trading is a form of investment. That means that although there are advantages, there are of course going to be disadvantages. Here’s the downside to trading binary options…
• When You Lose, You Lose – When you purchase stocks, if the price of the stock goes down, you can sell and recuperate some of the initial investment you put in. This is not the case with binary options because your prediction is going to be correct, or not. You don’t purchase tangible assets. There’s nothing to sell off when your predictions are incorrect.
• Market Regulation – When it comes to investing, we’re used to doing so in regulated markets. However, there are very few regulated binary options brokers, adding to the risk associated with the investment. If you are going to trade using this form of investment vehicle then do so with a regulated broker like anyoption, or Nadex.
Final Thoughts
Trading binary options, as with any other form of investment, comes with its own unique advantages and disadvantages. However, unlike most other investment vehicles, it comes with returns that tend to be over 70%. With that said, if you’re willing to pay attention to market indicators, learn how the binary options market works, and try your hand at a trade or two; you may be surprised at the amount of money you’ve got the ability to earn.
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