Have you heard about binary options trading? No? Let me fill you in quickly on what exactly it entails.
Regular trading of Forex or commodities involves “buying” a currency or commodity, waiting for it (hopefully) to rise in price, before selling it at a profit. While you never really own the asset, the process works the same as if you had it in your hand.
Binary options trading, however, eschews the traditional model. Rather, it involves you making a prediction of whether a currency pair or commodity will rise or fall and making a binary decision of “call” or “put”. For example, you can put money on the US dollar making gains against the pound sterling. If it makes gains during the time period of your trade, you make money. If not, you lose money.
It’s a very simple, yes or no way of trading. Brokers such as anyoption have made it even simpler than it sounds, by providing a user-friendly experience.
But you shouldn’t go in blind. Here are 5 facts you need to know about trading binary options.
- It is not a get-rich-quick scheme
Do not quit your day job with the fantasy that you’ll make millions overnight. You won’t. I mean, there will be the one in ten million who does, but that’s like making life decisions on the assumption you’ll win the lottery. Trading takes time, even with binary options, and you should hedge your expectations. It can be very rewarding, as long as you trade responsibly.
- It is not a gamble
There have been many binary options brokers called into disrepute for scamming unwitting traders. These brokers usually present binary options as a gamble, rather than a trade. A trade involves making educated decisions based on real life factors. As opposed to a gamble, which involves guessing. When choosing a broker, make sure the broker stresses the importance of news feeds, analysis, and the like.
- You can trade despite working full time
The biggest draw of binary trading, as well as other types of Forex and commodities trading, is that you can do it in your spare time. Whether or not you work full time, you will have hours in the day in which you can make those trades. It can be an exciting hobby, which makes you a lot of money as well.
- You’ll need to be in the know
Another advantage of binary trading is that, if you go about it properly, you learn a heck of a lot about the world. You need to know about political news, economic news, and more if you are to make correct decisions. This does not mean you have to be a financial mastermind. Anyone can do it, as long as they’re curious.
- It can be social
Social trading is becoming increasingly popular. Binary options trading can be social, in that you can keep track of what other traders are doing. This is especially true with anyoption, which provides both a “trends” function and a “show off” function. With trends, you can see what trades are trending. Show off allows experienced traders to share their successful trades with beginners.
Binary options trading can be a huge boost to your spare time and your pocket. Make sure to trade responsibly, and stay far away from scams.
from Finance Girl http://www.financegirl.co.uk/five-facts-you-need-to-know-about-trading-binary-options/
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