What are binary options?

Binary options are the one of the latest financial instrument to arise on the market. Over the last couple of years, more and more investors choose to invest in binary options as it has been proven an efficient way to grow your capital on the internet. Today, binary options have made a clear impression in the financial industry and several brokers are now operating online, giving private investors a chance to trade in binary options from their own home. New traders come into the world of binary options every day and it is definitely a growing business.

So what exactly is binary trading? Unlike most forms of trades, such as currency exchange or stock broking, binary trading has a fixed payout that you will either receive or not. The basics are very simple; it works just like betting on sports for example: For example, you can invest on your prediction of the market price trend on an asset. There are only two out comes, the price either goes up or down. If your prediction is correct, you’ll receive a payout that is fixed before you buy your option. If your prediction is wrong, you will lose your investment. It’s that simple. You simply decide an asset, and then choose which way you think the market price will go over a specific period of time. The specified time can be as low as fifteen minutes, and the payout is usually around 70-80% of your investment, meaning that quick profits are definitely possible.

The reason it’s called “binary options” is because of the two possible outcomes in every option you invest in, just like the binary number system only have to numbers. Other words that are sometimes used is Fixed Return Options (FRO) as well as Digital Options (DO).

Now that we know what binary trading is, how come it has become so popular? Well, if we take share holding for example, you need to hold quite a lot of shares in order to make a profit on a small rise in the stock price. So if you have got a feeling that a stock will go up, instead of having to put huge funds in to that stock in order to make profit, you can invest in a binary option for a much cheaper price but with a bigger reward. This also involves higher risks, of course, as you will lose your full investment if you prediction is wrong. This is why education and information is extremely important when it comes to binary options. Investors needs to know what’s going on in the world and what events are going to change the market in a certain sector.

Binary options are probably the most convenient way for new traders to enter the financial world. Since the system is so extremely uncomplicated, the basics can be learnt in just minutes, and as soon as you have registered an account at a website you can start trading with binary options. Of course, simply learning the basics isn’t going to be enough if you want to keep your profits consistent. As with anything, you need to practice to become good. But for a well read person, who keeps updated on what’s going on in the world, it’s definitely not impossible to quickly become profitable with binary options. Not only is it a fun activity that can be profitable, but you also get to learn important skills that are going to be useful in other areas of your life.