Traditional jobs are difficult to find, so people are turning to innovative approaches for making money online. Standard online approaches include entrepreneurial efforts to find a niche to provide a product or service. Few people have the start-up funds that are required to build a website, develop the offering and market to the masses. Profit is needed in the near future to sustain life while learning how to operate the business.
A different approach would be to become a binary options trader. This relatively new trading method requires less training while offering measurable profits. People are enjoying learning about financial markets, assets and trading methods. Low barriers to entry make binary options one of the most accessible money making ventures available today.
Binary Options: Explained
As the name suggests, a binary options trade can have one of two outcomes: the price rises or the price falls. A trader will never own the underlying asset on which the trade is placed. Instead, the trade states whether the trader believes the market price will rise or fall before the trade expires. Four asset classes are traded as binary options:
- Stock – The trader will select a stock that he believes has sufficient trading volume to cause the price to move in a particular direction.
- Commodities – Materials used to produce other products, such as grain, oil or precious metals, are traded on markets around the globe. A binary options trader selects one underlying asset and places the trade.
- Currency pairs – Movement within the currency markets is a challenge to predict. Experienced traders know how to set the expiry time for maximum success.
- Market indices – Value of an entire trading market can be predicted with extensive consideration for external factors.
For every trade, extensive research is required to determine the direction in which the asset price will move. Luck is not required to be an effective binary options trader. Discipline is important to prevent binary options trading from descending into gambling where the same methods are repeated until the entire investment account is lost.
Binary Options Trading Benefits
People are deciding to try binary options trading because of the low initial investment required. Some brokers offer the option of risking as little as one dollar for each trade. These small amounts allow the trader to learn what happens while the trade is active. Notes taken on each trade provide valuable insight for subsequent trades. Other benefits are worth mentioning:
- Variety – The breadth of choices between underlying assets allows traders with many interests to choose a well-known asset for each trade. Volatility can be embraced, or avoided, depending on the desire to learn more or earn money.
- Expiry times – Brief trading periods provide control for the trader. Each asset will require research to determine the best approach for setting meaningful expiry times. A trade can be active for minutes, hours, days or weeks.
- Opposing trades – Early on, a trader can place a trade on both sides of the price to reduce the risk of loss. This approach allows the trader to watch the market without being distracted by the outcome.
- Rates of return – Binary options trades can offer as much as 85 percent as a return rate if the trade finishes “in the money.” Brokers sometimes offer a 15 percent return on trades that finish “out of the money” as well. Small differences in these rates will make a significant difference in earnings over time.
- Risk management – Unlike traditional investments, the trader has more control over the outcome. Large investments in each trade will not be necessary to make substantial profit. As the trader learns, additional trades can be placed on various assets. The possibilities are endless.
Find a Binary Options Broker
The new trader must select a binary options broker who offers the binary options and associated odds. Research about each broker should be conducted to find the right platform and customer service level. Online binary options forums are excellent sources of information. Written comments can provide insight for the user-friendliness of various web interfaces and brokerage houses. Experienced traders are willing to share personal encounters with various traders.
Maximizing the Binary Options Venture
Traders are wise to listen to binary options advice provided by the broker. Demo accounts are available to provide a safe environment for learning. Online research about assets allows the trader to recognize trends and place trades that have a high potential for finishing “in the money.” Experienced traders recommend limiting the trades to one percent of the investment account value. This approach restrains the desire to invest too much at first. As the account grows, the trader should follow the five percent rule: never invest more than 5 percent of the account value. Placing binary options bids following sufficient research is the best approach for long-term success in binary options trading.