With so many options to choose from, jumping into the stock market trade can be intimidating. But it doesn’t have to be. Enter binary options. Trading binary options reduces the amount of choices you can make regarding your holdings to two: “buy” or “sell.” It strips away all the convoluted jargon and minutiae rattled off by expert stock traders with ease and simplifies the process for those just getting started. It may already sound enticing enough, but there are a variety of reasons by binary options trading is a great way to get your foot into the door on Wall Street.
Various Asset Types
The first thing to realize about binary options is your investment opportunities are just as diverse as in other methods of trading. You can trade currencies, stocks, commodities, and indices freely while exercising binary options, again without getting involved in the more complex nuances of the stock market. Since you’re still open to so many opportunities, you can begin to diversify your portfolio even through binary options, which translates to an overall lower risk of losing your entire investment in one fell swoop. Since your eggs are not all in one basket, a single loss will not completely break your entire portfolio apart.
When investing money into binary options, you’re not earning money based on growth (or losing it based on recession). You’re simply betting on your stock of choice growing over a certain point by a specific time. Think of sports betting: It doesn’t matter if the favorite beats the spread by 1 point or 20 points; if they cover, you win. As long as your chosen stock grows over a predetermined value by the closing bell, you cash in. Of course, if your stock sees significant growth, you may feel as if you lost out by only investing in the binary option. On the other hand, however, you don’t run the risk of building up an investment over time only to lose it on a single bad day.
Since you’re only given two options when dealing with binary trading, you don’t need that much background knowledge of the stock market to get started. It’s a good way to get your feet wet, especially if you have bigger plans for investing in the future.While trading actual assets involves payments to brokers in relation to the size of your investment, brokers usually charge smaller fixed fees for binary options. Furthermore, if the client loses out completely, he typically isn’t charged any extra by brokers (since he doesn’t have any money to “cash out”).
Instant Gains Possible
Typically, investing in the stock market isn’t a get rich quick scheme. It takes months, even years, to build a portfolio profitable enough to be worth mentioning to anyone. This is due to the fact that the growth you see on a day-to-day basis only increases by fractions of percentage points. But because binary options trading is an all-or-nothing venture, it can instantly lead to a much larger return on investment. And, since the investor isn’t locked into anything in the future, he’s free to take the money he’s earned as his own.
Exciting Introduction to Trading
Binary options trading, as it should be clear by now, is a great way to dive into the world of stock trading. It’s fast-paced and easy to understand, so becoming engaged in the process is simple and not overwhelming. Most importantly, it’s a great way to begin monitoring stock prices and trends over time while not risking as much money as you would if you were to truly invest in specific stocks. Though you’d really only need to pay attention to whether or not your stock closed above a certain point, it will become hard not to notice these trends, which will make it much easier to slowly make your way into the “big leagues.”
Featured photo credit: Wall Street / frankvanbodegom via farm3.staticflickr.com
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