Binary options trading has gradually become one of the most popular ways people around the world use to leverage their income. Popularity has much to do with the use of advanced web- based trading platform and the simplicity of the system. Although binary options were first recognized as a legitimate form of trading only in 2008, the fact is they were here many years before.
It all began in the 1970’s ‘ with a new form of trading which was known as over the counter options (OTC). Short term options were physically traded by a physically going to a brokerage firm and purchasing the options. OTC’s much like the new binary options are financial investments on a virtual option rather than on a physical financial assets, these options are then linked to the financial assets price and profits are subject to this price change.
More than 40 years after the appearance of OTC options into the financial world, binary options entered the financial scene. Binaries were first approved by the US Options Clearing Corporate (OCC) towards the end of 2008 followed by the Chicago Board Options Exchange (OCBE) in 2008. The approval of binary options by these two financial authorities was the jump start to what we now know as one of the most advanced financial instruments the world has to offer.
Binary options are virtual options which can be purchased on almost any existing financial asset. The advanced technology is based on the internet and trading can be made from any device which has an internet connection. As oppose to Forex trading, binary options allows the trader to handle one account which will follow him or her where they go. The fully based platform enables the trader to follow his trading history from the office, home or on vacation, there is no need for any software download.
Still wandering what are binary options? Binaries are different from conservative investments in the both the way they are processed and their meaning. Instead of purchasing an actual financial asset traders are purchasing a contract on an assets price performance. The contract can be purchased on any financial asset such as; Stock, Commodities, Indices and Currency- Pairs (Forex). Once the contract is made the traders should decide whether the actual traded assets price will rise or fall within the contracts time limit which is known as the options expiry time. If the prediction is correct and the price movement was in accordance to the traders prediction then the trader will have made a profit, leaving him in-the-money, otherwise the trader will have lost his investment leaving him out-of-the-money.
Binary options are so attractive due to their nature of being maybe the fastest financial investment; offering expiry times of as short as 30 seconds and up to one year doesn’t leave much room for completion and results are almost instant. One other reason is the Ludacris profits which are offered when it comes to binary options trading. Average profits are 81% and some options offer a potential profit of 500% ROI.
The binary industry isn’t bullet proof and has had many critics comparing it playing the roulette, however experienced traders who use the right binary options strategy seem to have found this as a very profitable investment together with the approval of binary options firms as investment companies by several European regulators does in fact legalize and approve this form of trading.
This been said, it is important to remember that binary options are an investment which contains high risk and trading should be based on a well-established trading strategy.
Join the free Master Your Money course!
Join the free email course and finally learn how to manage your money better, pay off debt, save more money, and reach financial freedom.