Binary Options Trading

The MAIN cardinal rule of thumb of investing:  – if you don’t understand a product/business, you shouldn’t invest in it... If you break this rule, blame yourself, entirely.

Most of us have probably heard of and even tried our luck with Binary Options trades. I can also bet that those who have tried this have lost their money. Binary options trading is very addictive even as it is bereft of losses. Fact: 97% of trades in Binary options end in losses. With this kind of loss rate, why has this become such an attraction that it is probably within the top 10 reasons why many people are always online at any one time? What is the fuss?

Ponzi schemes and Forex pyramid schemes are notorious for the losses that they have occasioned many people who were deluded by the promise for a quick return on investments by smooth talking sales people. Binary Options trading is a new kid on the block, barely 10 years old, that is a largely unknown variety of trade but has proved to have the necessary allure to make it a suspect business due to the high ROI floated.

What is Binary options?

Binary (two or, better still, one of two possibilities) options are estimates (loss or gain) of underlying assets performance during a given time frame. As an illustration, and to understand the beauty of binary options trading, let’s first take a look at how investment in other trading markets usually works.

In most forms of investments the investors actually purchase the asset they invest in and the value of the profit and loss is determined upon the changing value of the asset. If the investor sells the asset back to the market whenever its value increases then they're making a profit, and if they sell the asset back to the market when its value decreases, then they will lose an amount equivalent to the decrease in value. This type of investment requires the investor to constantly worry about when to sell the asset and get out of the market to avoid exposing his entire account to the market’s volatility. 

In Binary Options,  trades are done on futures on the market and not in the market like other trading methods, as you are just predicting the asset's movement for a predetermined time frame as short as 60 seconds to 1 hour.

Binary Options Trading

The word binary stands for “having two parts”. Generally speaking, all you need to do is predict either “Call” or “Put“. Binary Options trading has only two investment possibilities for prediction and hence choice. Higher or lower.

One investment possibility is expressed when you predict that the price of the asset will rise, this type of investment is named “Call” option. The other possibility is presented when you predict that the price of the asset will fall, this type of investment is named “Put” option.

Choosing an asset is the first step of your investment. For instance, if you have an interest in gold prices, you may choose to place a binary investment in gold. Obviously, the more familiar you're with the gold market the better your chances are of successfully predicting the fluctuations of gold prices in the very short order of time at your outlay.

Promises of Quick and Easy Earnings

This is the only trade where you are promised to make money whether there is an increase or decrease in the asset value, and the rates of return, either way, are at astronomical highs of >70%. With this promise, coupled with the fact that the investment period is as short as 60 seconds, who would think twice about diving right in? It gets even better when the returns are actually as promised and the trader ends up with an "in-the-money" result in the Binary trade parlance. The biggest difference between losses in Binary Options trade and the traditional investments is that in Binary options the loss is total, as the investor loses both the investment and any expected earnings.

Due diligence

Other than Death and Taxes, life is otherwise full of uncertainties which means that we must be very careful before engaging in ANY endeavour. We cannot start to complain about Binary options trading that it is this or that without first considering the risks that other conventional business practices throw our way. What is my point? Do I support Binary Options trades? Yes, I do as much as I would support any business like the one I have been doing for the last 12 years. Every business can make/lose money so we have to conduct our own research before we take the plunge. Every business has scammers in equal measure and we can be cheated/conned in any venture.

As part of due diligence, we must first understand the business so we can know what to ask. This means we must be trained. Who will do the training? There are organisations that undertake online trade courses though some registered Binary Options Trade Brokers also give free training sessions for their registered members. This kind of trade is not exactly new, but has increased in practise since the onset of the internet with more interest being shown in the past 10 years. Before registering with any broker(s), please checkout their Country of registration, licenses, and affiliations and what certifications the domicile Country prescribes to such entities. Do you have a fallback position and is it worth the trouble should you chose to go that route? These are basic entry point advises.

Developments in Binary Options Trading

As with every industry, the Binary Options Trading has evolved, with time to embrace the ever changing business environments that all business activities face. Whereas the majority of the people still want to be in control of their investments by entering trades on their own, and losing miserably, there is a better way that some brokers have devised where there is some measure of sobriety in the process. This sobriety comes with experience and practise so normal traders would be well advised NOT to enter trades no matter how 'sure' they maybe of the outcomes. As mentioned earlier in this publication, we must remember and appreciate the uniqueness of Binary Options Trading as any loss will wipe both profit expectations and the capital invested. 

FACT 1: Nobody can make a living from Binary Options Trading since 97% of the traders make losses due to an assumed expertise status. How long long does it take to qualify to be an expert in any field? Depends on the relevant field, yes, but would this period be 10 minutes? NEVER, not under the current sun. Why, then, do we presume to be experts in Binary Options Trading just because we ended 'in-the-money' with 1 or 2 trades?

FACT 2: Every business has experts and Binary Options Trading is no exception. If one sets out to get these experts, they are easily available.

FACT 3: We, daily, invest in the plethora stock markets and we never proceed to 'camp' at the stock market exchanges to see how our investment is doing. We simply let our Brokers handle the back-end of the trading and we trust them with whatever returns they bring forth. Why should Binary Options be different? Is it due to the transparency of the internet-age where every activity is under the interested public glare.

FACT 4: Every business, in any industry, has scammers/tricksters/conmen and yet we still invest, irrespective of this. We just need to be clever not to be easily cheated, by being diligent to a fault.

FACT 5: Every Industry and business in each Industry has its cardinal rules. Please find out which ones are relevant and apply to Binary Options Trading. Your choice Broker knows them and would be glad to advise appropriately.