Binary options are a relatively simple form of investment – the one you can easily understand and utilize to make money on your investments. Investments in binary options are made in a hope that the asset or investment value will touch a particular target price on a given date
If you are good enough at anticipating the market, you will make money by getting a fixed amount in return but if you fail to predict the market, your investment will be worthless.
Anyone with an understanding of how the stock market works can learn what binary options are. Here is a simple list of 7 things you should know about them:
1. Binary Options are both regulated and unregulated
Binary options are both regulated and unregulated as some are even traded at NASDAQ whereas some are purely traded on the internet.
SEC also issued warning to the US traders in terms of trading in unregulated binary options.
It is extremely important that you know whether they are regulated or not. Reading expert advice on binary options tips will surely help you to understand their risks.
2. They are either call or put options
The call and the put are two basic and fundamental strategies used by investors dealing in binary options. And they are real simple to understand
If you believe that market is going to go up, you will buy a call option and otherwise you will buy a put option i.e. basically believing that market will go down.
3. Foreign vs US Binary options
If you are a US resident, note that foreign binary options are not regulated and you need to purchase binary options which are regulated under US Laws.
All major stock exchanges in the US allow binary trading under the regulated laws, therefore, you can easily trade i.e. buy or sell them in the hope to make a profit.
4. Don’t buy them through websites
There are a lot of websites which are offering binary options trade in an unregulated manner. They are not only scams but also are not regulated.
You should trade them through a registered broker or trader who is registered according to the laws of your country and listed with SEC or other regulated bodies. Most websites are not registered therefore stay away from them.
5. Your options to trade are limited
In all binary options, you always buy an asset- often called an underlying asset. Many exchanges, however, only allow trade in four types of assets i.e. stocks, foreign currencies, commodities, and indices.
If you are looking to trade on other types of assets such as property or bonds, such options will not be available. Since your options are limited therefore you need to be really specific and particular when choosing an underlying asset.
6. Time to hold a binary option can vary
In all binary options trades, you are required to hold the option up to a certain fixed period. This period can vary from merely 60 seconds to a year.
It is often the case that we fail to predict the future beyond few days, therefore, do not trade on binary options of the longer period until you fully understand the dynamics of your underlying asset. Binary options if fully understood and invested in a careful manner can make any investor a lot of money. If you are a new investor it is better to stay away from the investment methods, you do not understand fully.
If you understand this market, binary options can provide you a lot of flexibility to earn more and hedge your other investments to make more money. But be careful, it is not advisable to trade under the influence of your emotions.