The basic idea behind binary trading options is very simple to understand. In binary options, you just have to speculate whether a certain asset will end up above or below a specific threshold. The right prediction can earn you a good amount of profit based on some percentage of the original amount. On the other hand, a wrong prediction will cause you to lose the original sum. In many cases, you can get back 15 to 20 percent of your investment back when your prediction proves to be wrong.
Although there are some risks involved in binary options trading but still this type of trading has gained quite a lot of fame in recent times. The variety of assets offered in binary options is voluminous ranging from stocks and indices to currency and commodities. As this is a relatively new form of trading, many people have questions and confusions regarding it and therefore I will try to clear a few points here. So here goes….
Do I have ownership in the company when I invest in binary options stocks?
It is quite natural to assume that you can claim some sort of ownership in the company whose assets you are trading. However, this is not the case in binary options. There is a difference between shares and binary options. Binary options do not give you the right to ownership in any form. Binary Options simply allow you the freedom of prediction of movement of prices regarding specific assets. Once you reach the expiration date, all ties with the company are severed.
How does Binary Options trading work?
We will look at a simple example so that you can get a better understanding of binary options. Suppose you feel that the price of sliver will rise within the next hour and so you decide to buy a binary option worth $500 on silver. Your broker ensures that you will get a 76% payout on the trade. If your prediction becomes true you will be paid $880. This is actually your original invested amount of $500 plus the profit of $380 you made through your correct prediction. However, if you predicted wrongly then you will lose your invested amount. No further claims can then be made unless your trading firm gives you some refund amount.
Where can I trade Binary Options?
Internet will be your best resort for trading in different types of binary options. It will allow you to surf through numerous broker profiles and platforms so that you are in a better position to decide. Prioritize and then choose. Some platforms are more user- friendly while some provide sound insight and strategies. The choice is yours. Videos, E-books and blogs are also available for your guidance. Look for a broker that offers you variety of stocks, currencies, indices etc.
There is so much that you can try for an efficient trading mechanism. But before investing your money, you should clear all your doubts and queries. A binary option is a less risky venture for investment. But Low risk does not mean No risk. Choose a reliable broker and be vigilant when trading in binary options so as to maximize your profit in this trade. Wish you all the success!