Binary options is gaining a lot of popularity and you want to find out more about this investing phenomenon. There is a huge growth of binary options that has attracted the business world and there is no way it is stopping on its growth. Trading through binary options is becoming more and more popular and some experts predict that it may even reach the level of trading Forex, if not surpass it in popularity.
The question now is – should you take part in this trend? Shouldn’t you let this opportunity slip away through your hands as the payouts are quite high? Is it too good to be true? Is this type of trading only for rich people? Are binary options only for millionaires or big corporations that have tons of money to invest in different areas?
The favorable answer is no – you do not need a lot of money to trade with binary options. And no – you don’t want to let this opportunity pass you by. But before you start trading in binary options, there are a few things you need to know.
Binary options trading is based on a simple “yes” or “no” proposition. Will an asset be above a certain price at a certain time? Traders will place in trades based on what they believe is a yes or no, which makes it the simplest of financial assets to trade. It’s an all or nothing investment, so it can be quite risky.
However, this type of simplicity has resulted in a ton of appeal among traders and newcomers in the financial market. It’s easy to get started because it’s an easy system to understand, as long as it’s been explained to you that it’s all or nothing. There’s no “halfway” with binary options.
But, as simple as it looks, traders should still research and try to fully understand how binary options work, including what markets and time frame can they trade with it, advantages and disadvantages of these products and which companies are legally authorized to provide binary options to U.S. traders, because not all of them are legal.
For binary options in the U.S., it provides a way to trade markets with a capped profit potential and risk.
For example, “Will the gold price be above $1,000 at 2pm today?”
If you believe that it will be, you buy that binary option. If you think that it will go below at 2pm, then you sell this binary option.
The price of a binary option ranges from $0 to $100 and just like with other financial markets, there is an ask and bid price. The bid and offer can fluctuate until the option expires and you will need to close your position anytime before the expiry so that you can lock in your profit or reduce a loss.
Binary option brokers offer different types and account levels to the traders. They are usually related to the deposit you made for binary options trading and they can vary with each broker. Keep in mind though, that there is one thing common for the best brokers in the binary options trading platform: they have a minimum deposit and industry average of $200 but there are also brokers who offer even a lower minimum deposit.
When you deposit more money into your account, you have more power to protect your trade so it’s important and advisable to deposit higher than the minimum amount. Just think of it, the higher the deposit you make, the more benefits you can get from your binary options broker as they can also find you a better trader out there. If you still want to start with smaller deposits, it is also still possible for you to have space to maneuver around. This makes it an attractive option for those without a lot of cash who want to get started trading.