What are Binary Options All About
Over the years binary options have become increasingly popular among investors. It is a financial option where there are only two possible outcomes: Paying off a fixed amount as per the initial option or not paying off at all. Essentially the trader is ‘predicting’ what they feel will happen to the product over a certain period of time (i.e. will it close higher or lower at a certain time), and if they’re right they make a profit, but if they’re wrong they do not.
Advantages of Binary Options
A big part of the popularity of binary options is due to the advantages that they provide to investors. Some of these advantages include:
Limited and Known Risk
Although binary options only allow you to make a profit or lose, the risk involved is limited to what you initially invest. Prior to investing, you will already know exactly how much you stand to profit as well as exactly how much you could potentially lose and can thus limit your risk and exposure to whatever you see fit.
High Potential for Profit
With binary options, the returns on an investment is typically higher than most other types of investment, and tend to average around 60% to 90%. Primarily this is due to the risk of potentially losing the investment itself but compares well to other investment opportunities such as forex trading where the average weighs in at about 10% to 15%.
Fast Turnover Rate
The turnover rates on binary options can differ quite a bit, but some are as low as 10 to 15 minutes while others are as high as a day or more. Generally though that is still a much faster turnover than many other investments, so you will know the results in a short span of time.
Easy to Access and Understand
Unlike most financial options, binary options are extremely easy to understand – even for relative beginners. All the information about the option such as the investment required, the potential profit, the potential losses, and the duration are provided upfront. Many binary options trading brokers have made the process of trading extremely accessible too.
All these advantages have made binary option trading extremely attractive, both to more experienced investors and beginners alike. Just like any investment there is some risk involved, but there is a considerable potential for high rewards over a very short span of time.