For several years, it was not possible to trade in binary options independently. When Chicago Board of Exchange pronounced them a standalone product, things changed in 2008. These options were made available by the North American Derivatives Exchange (NADEX) the same year.
The binary options trade started to become more popular because of the advancements in the Internet technology. Since binary options were adopted by almost all the major exchanges, they slowly became an essential part of the trade business. And because of this, there are several government rules and regulations concerning them.
In the binary options, investors and traders have to make a prediction about the changes in the asset’s future price. They can pick an asset available with the broker and make a prediction of the direction of the movement of its prices. The actual asset is not part of this contract. This means physical assets are never involved. The duration for this contract could be anything ranging from a few days to months. In fact, the duration can often be just a few hours.
To predict the movement in the prices of an asset, investors have to observe the trend of the market and keep track of the events across the world affecting it. If an investor feels that the prices are going to increase, he goes for a ‘call’ option and if he feels they are going to fall, he chooses the ‘put’ option. These are short term contracts. The trade-process is very easy and the quick results make it a very attractive option for investors.
Trading of binary options is done on an online platform. This enables an investor to trade from any part of the world. He just needs a computer with an internet connection. Investors just need to login on a broker site and start trading. Entire transactions and withdrawal of money can be done online. This further makes the process of online trading of binary options easier.
Investors make an account with the brokers online and deposit a sum of money with them. Normally, brokers specify a minimum amount that is needed to be maintained with them. There are a few popular brokers which also offer a trial account for their investors so that they can learn how the process works. This is very useful for both a beginner and an expert. A beginner can learn the process of trading whereas an expert can try out new techniques and even a new class of asset.
It’s not just the ease of trading in the binary option that has made them so popular. There are other reasons for its popularity. For example, limited risks and set returns etc. have contributed to the popularity of these options in recent times. An investor knows what he is going to make out of it or what he is going to lose before the transaction is done.
Like other options in the market, binary options as have a few limited risks involved. Nevertheless, the returns are also very good. It is natural that an investor will not make a profit in each and every trade that he does, but he can still make good money out of this option.
Binary options have become very popular lately. Investors who want to grow their money can definitely take advantage of this option to maximize their wealth.