All or nothing – It was in 2008 when binary options were first introduced as tradable assets at the Chicago Board of Exchange (CBOE). For many and especially investors around the world, 2008 will never be forgotten. It was the year when financial markets came crashing down like a house of cards – crippling the global financial system.
That year, the pressure for the availability of lower-risk investments reached epic proportions. It didn’t take long for the financial world to recognize binary options trading as a new vehicle for average traders for growing and developing their finances.
How It Works
Simplicity is the hallmark of binary options trading strategy. There are only two possible results: you profit or you lose. And essentially, an investor only has to guess.
Here’s an example: Let’s take XYZ Steel Company whose share price is $30. A binary option could be as simple as whether XYZ Steel Company’s share price will be above $30 on March 29 at 9:30 AM (the expiry date).
If the company’s share price ends below $30 at the expiry date, the investor loses his investment – although, depending on the platform they’re using, investors may get something despite losing.
However, if XYZ Steel Company’s share price lands at above $30 at the expiry date (even just by a cent), the option exercises automatically and you – the option holder – gets a stipulated amount of money.
The Risks You Have To Be Aware Of
While many investors find the simplicity and relatively big gains afforded by binary trading extremely attractive, it does have its share of risks. For someone who’s looking to get into the game, awareness of the risks and knowing how to minimize them is paramount. Here are some of the factors you need to seriously ponder about before jumping in with both hands and feet:
- Market Risk: Just like other forms of investment and trading, binary options involve overall market risk. After all, markets can and will move in different directions almost without warning. True, there are ways to sense and predict the market’s movement. However, even the most thorough and discerning market analysts cannot always determine which direction the market will take with 100% certainty.
- UNFORGIVING P/L (Profit And Loss) Points: Binary options trading is an all-or-nothing affair – that should be pretty clear by now. Usually, the value for this type of option are decided by as many as 3 or even 4 decimal points (ex.: 0.0001). Yes, the slightest tick can mean the difference between a $700-profit or a $1000-loss!
- It’s An OTC Market: For those who are new to investing and trading, OTC means “Over The Counter” – and this perhaps is the biggest risk involved in binary trading. OTC markets are sparsely regulated, and it’s possible to run into trading platforms and brokers that resort to not-so-honest practices so be extra cautious.
Despite the risks however, traders of different skill levels have profited from this type of option with the aid of bots. Yes, binary options robot / software are not always bad!
Using A Binary Options Robot…THAT WORKS
Trading bots have been mainstays in the forex trading scene for the longest time. Binary options robots, on the other hand, are relatively new. Having said that, using these new but meticulously-created trading bots does have its advantages:
- Flawless At Technical Analysis: For a new trader, reading charts and graphs correctly takes quite some time to get used to. Binary trading bots, on the other hand, don’t suffer from these shortcomings. They’ve been built from the ground and up to perform accurate technical analysis – reading and analyzing graphs, charts, and other financial data with almost 100% accuracy.
- Tremendous Flexibility: While some automated binary trading systems are a tad more complicated than the others, almost all of them were created with flexibility in mind. Even a new trader can correctly set parameters and indicators for maximizing profits and minimizing losses.
- High Level Of Security: Depending on the type of security offered by the bot’s authors, security can be a con. However, a binary options robot that works and is air-tight secure is worth its weight in gold.
With a regularly updated; 100% secure; and glitch-free binary trading bot, you’re guaranteed that your automated binary trading system will stick to the parameters you’ve set 100% of the time – increasing the likelihood of a successful call.
Yes, it may sound like gambling to some and it’s a sparsely regulated, OTC market. At the end of the day however, binary options trading isn’t any different from forex or stocks exchange. It does have its fair share of risks and rewards.
Used by the right hands, binary options trading can be transformed to a wealth-building tool. And if that sounds appealing to you, getting booked-up on the intricacies, risks, and ins-and-outs of binary trading should be your first step. Oh! And perhaps you should grab a reliable binary trading bot for good measure!