Binary options have gained popularity over the past few years due to its simplicity and wide availability of underlying assets. In simple terms, binary options may be defined as a yes or no proposition where the trades are based on the belief whether the underlying asset will go above or below a particular value at a certain time.
It is one of the most simple trading options available today and this is the reason it has broad appeal among newcomers and traders. Some traders trade exclusively in binary options due to its potential to make huge amounts of profit in a relatively short period of time.
One of the biggest advantages of binary options trading is that a variety of underlying assets are available for trading. For instance, Nadex (authorized exchange for binary options trading in US) offers a variety of financial and non-financial assets for trading including stock index futures such as The Dow, Nikkei 225, NASDAQ-100 and DAX among others. They also offer foreign exchange currencies, commodities such as crude oil, soybeans, gold, silver and others as well as economic events such as non-farm payroll, jobless claims and fed funds rate among other underlying assets.
Pros and Cons of Binary Options Trading
One of the biggest advantages of binary options trading is the potential for quick payoff. The payoff for your investment may be as high as 80% and it can be gained within hours. Also, the total losses are always capped and there is no risk of margin call which is the case with ordinary options.
There are also a lot of auto-trading systems available for binary options, with one of the latest being Swarm Intelligence software. Take a look at the video for more information:
Binary options are extremely simple to trade. No underlying assets are bought or traded when you trade a binary option. It is extremely easy to execute and there are a number of binary options brokers available in the market.
There is no need for risk management as there is no extra risk. Some brokers also offer significant rebate on the brokerage amount which means your investment is not a total loss in case your prediction goes wrong.
As far as the cons of binary trading are concerned, you need to take high risks if you want to make higher profits as the profit potential is also limited for a trade. You need to make multiple trades in order to make significant profit. Also, a trader needs to be more right than wrong to make money from binary options trading.
If you want to be successful in trading binary options, it is important you choose a particular underlying asset and understand the factors that derive the trends. The only thing you need to make money in binary options trading is to develop the ability to predict the future trends on the underlying asset.
Binary options trading should not be seen as a get rich quick scheme. It is a financial asset that has the potential to make significant money if you take the time to understand how market works and how you can maximize profits. Experienced traders make a lot of money through binary options.