Binary Options are really gaining allot of traction these days, especially with brokers like Banc De Binary surpassing 200,000 account holders and talk of even offering debit cards to account holders first to there VIP clients and then to smaller account holders. I believe one of the reasons we are seeing such a rise with this type of investment option is because they're very simple to trade. If you've traded forex before you typically set an entry order(pending order), have a 30-40 pip stop in place and typically a target at the first swing high trendline, next level of resistance, Fib Retracement, or even another custom tool to target your biased measured move of the market. But with Binary Options all you need is a strike price of when to enter the market, a direction being Up(Call) or Down(Put) and choose your expiry time for that contract and your trading. It really is a beautiful thing and quit simple for a beginner, and/or seasoned trader.
Some additional advantages of Binary Option trading are the benefit of super quick expiry times like 60 seconds or longer times like the End Of Day, Next Day or even as long as the next week or month?
Of course in order for the trade to be valid there has to be a contract available for the expiry time and enough liquidity for that asset(meaning the broker still has contracts to sell you and that they haven't all been taken)or the broker can't sell you that option. It is pretty amazing that trading these types of options you can really earn 70-85% per trade or if its a "One Touch" trade, meaning the market price either rises or falls to pre-determined level you bought the contract at then it could pay anywhere between 200-550%. Usually these contracts are over the weekend, like a two or three day trade.
If we were to discuss possible Cons to trading Binary Options I would first have to start with the fact being you have to wait till the contract expires to know if you win or lose. This is a major difference than if we were trading Forex and our trade went immediately Up or Down. At that point if we desired we could close the trade and take our profits or slowly take some money off the table and let the rest run hopefully with the Trend. But with this type of trading you are at the mercy of the market and that your expiry time was a right decision for when to exit the market.
Another Con with this type of trading is if your wrong the majority of your investment is gone unless you opted to receive maybe 5-25% of your investment back after expiry. But the majority of traders are looking for maximum exposure to receive maximum profits so all is lost if the trade goes bad. Rather with forex a pre-level stop would exit you out of the market before all your profits would be lost on any one trade.
As with anything its wise to do your research about any Broker, some are definitely scams. At this point in time the binary options world is not regulated by the NFA and CFTC. But I'm sure this will change in the future as our politicians will want to get there dirty hands on any money being made and will regulate it. Yes there's some advantages with protection but there will also be disadvantages to everyone with all referral commissions ending and no solicitation of any type of security without a Series 7 license. Possible other licenses will be required just as with being an IB in the Forex world.
In Conclusion, Binary Options are a favorite of mine, they have allot to offer. And really if you learn how they operate they can provide a solid income stream to the novice or professional investor. I've seen folks take a $200 account and in 41 days have already made over $4,000 on the account. Not bad huh? This is very possible if your a good trader, and/or have a solid team of traders working with you in a signal service like http://www.intellitraders.com.
Happy Trading!
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