I have always appreciated the diversity of life. I strive to try new things, travel as much as I can and create unique experiences through my endeavors. Along the way, I became an investor. As such I looked for the more established and traditional trading instruments. I have traded through different platforms on well-known stock markets, buying and selling stock, bonds and commodities as well as trading in currency (forex). As an investor trying to look for an edge in the market, and an open minded person willing to try new things, I came across binary options not long ago and decided to try it out.
Binary options are completely different from any other kind of investment I have ever made. While traditional forms of trading require you to buy an asset, which you end up holding for a given period of time, binary options allow you to buy only a position vis-à-vis a given asset. To put it in simple terms, you place either a call (high) or a put (low) on a given asset, setting a precise expiry time, and taking the value of the given asset at the time of your investment as the base line value. Once the time on your call or put option expires, you will get paid if the asset has moved in the direction you predicted it would move in, relative to the base line you have set.
Unlike investments in stock, forex, commodities and other assets, binary options brokers will not allow you to make a leveraged investment. This serves to reduce your exposure to any investment that may turn out to be a loss and it makes your life simpler because you don’t have to factor interest payouts into your returns. In other words, binary options brokers do not allow you to invest more than what you deposit in your account.
Binary options brokers have succeeded in tearing down other barriers of entry, like trading fees and minimum deposit amounts. The minimum required amount of money to open an account range between $20 and $250, and the minimum amount of money needed to make a trade can be as low as $1 per trade. None of them charge a fee on any trade you make. In my opinion, brokers in more traditional markets should take note and allow the small investors access by getting rid of those barriers.
Another great advantage of binary options trading is the ease and speed with which it can be done. On spot trading allows you to own a position vis-à-vis an asset in seconds, and some brokers are so fast that it takes them less than a full second to open your trading position. Traditional investment and brokerage can take a minute or two in the best of cases until your position has been opened or closed. Moreover, binary options trading allows for 24/7/365 trading, which is unusual to find with other kinds of investment brokers.
With that being said, newcomers like me should be duly warned: binary option trading can be a high risk endeavor. It is up to you as an investor to design your own investment strategy, taking into account your appetite for risk. Only then will you be able to take advantage of binary options and enjtoy the rates of return that he industry offers. My experience with this industry has been generally positive and I encourage you to try something new. Sign up for a free demo account on a trustworthy broker and start learning how to invest in binary options.