Binary option is a kind of unorthodox financial but extremely fast instrument. They are a kind of derivative that reflects whether the price of a particular asset will rise or fall in the stock market’s future.
Binary term usually means having two possible outcomes, and here it is based on winning and losing an outcome.
Binary option is a new method to trade and make money online in the stock market.
In Binary options trading, the payout is either fixed or will be absolutely nothing. All the options under this depend on the outcome of ‘Yes’ or ‘No’ and nothing else.
The only possible best thing in this optional trading is that you can trade without any investment.
Theoretically, it seems easy, like with any kind of trading, but in reality, it requires luck and a lot of skills and knowledge.
But it also doesn’t allow traders to take a position in the underlying security, the basket of assets. In this kind of trading, the outcome solely depends on the future price prediction.
Nevertheless, let’s talk about the role of Binary Options in trading.
Role Of Binary Options in Trading
Binary options usually have a clear expiration time and date with their strike price. It is a kind of financial betting. It is a prediction-based game. Before you place any deal or trade and know exactly how you will gain if your prediction is right.
For example, if you invest $100 during this trading, you will receive a credit of around $170-$195 on that particular trade. All the outcome is based on ‘Yes’ or ‘No’.
These options automatically execute themselves by seeing the loss or gain in the trade, and spontaneously, the payment is credited or debited to the trader’s account at a sudden period when the trade option expires.
Truly Binary options are a completely new method of investing that people are now considering for making more money. But it is essential to understand and clear the concepts of rewards and risks of this financial instrument as people often get misunderstood.
So now let’s discuss whether it is really possible to get rich quickly by doing Binary Trading. If you want to profit from this Binary option, you need to look at every possible pro and con like, for example, risk tolerance, capital requirement, research analytics, etc.
Factors To Consider
Here are some listed factors from which you will get an idea.
#1 Role of Required Possibilities
Well, according to recent surveys and reports, the possibilities to get rich seem a little low. Getting rich through this option is a type of qualitative phrase.
As Binary Options strategy totally works on predictions. As said, it’s like a financial bet.
But this strategy is widely followed by many crypto traders and entrepreneurs for instant success.
But some traders who gained experience in this trading option concluded that it is legit, but it is not really safe. It is difficult to get rich through the Binary Option, but it is typically based on luck like a ‘one in a thousand’ kind of person.
The chances of getting rich and succeeding in this are really very low, but it is not impossible. But that low word seems so low that even the lottery tickets will sound like a better and safer option.
#2 Role of A Broker
The toughest task in Binary Options trading is to find the right legit broker with an ideal repute. And finding the best binary broker will increase the chances of profit and fewer chances of errors or any sort of loss.
Always try to consider those binary brokers who offer free demo trials. Due to this, the process will become more flawless and research well for everything like seeing for transparency, professionalism, and services.
There is no doubt that Binary trading has many risk factors, and that’s why you should be aware of the brokers claiming strategy.
#3 The Role of Timeframe
A well-known finance fact based on time is “the longer the investment period, the higher will be the profitable outcome”. And the chances of a profitable result decays significantly as the timeframe of a particular investment trade decreases.
This is another crucial reason why it is hard to get rich in binary trading.
Short-term traders invest their 1 minute as well 3,4- hours on the chart. And this one minute provides all the information like entry and exit signals.
So, try to make better time framing strategies for better results, analyze charts and focus on that particular time frame that works best for you. First, make sure your strategies are aligned according to your time frame. And then decide your ‘main’ time framing.
#4 Role of Payout
Binary options results or precisely payout is mainly the certain type of expected return that a trader will receive. The standard payout in Binary trading is around 75%-80%, and this percentage depends on brokers. Many brokers also offer about 90% of the payout.
Quotex.io is a top-listed binary broker that offers the highest payout returns.
The payout ratio plays a very crucial role in this, but it is a very tough game as winning through predicting the future price seems harder.
#5 Role of Frauds and Scams
Certainly, this tool is not a scam; the frauds for most of the parts are somewhat associated with brokers. Brokers could do that scam basically because most of them do not have much experience and are not real legally.
No doubt, it involves betting on financial assets, commodities, shares, and many more. But unfortunately, all the frauds and scams are all too uncommon.
A report stated that “In all the cases, the problem isn’t with binary trading options, it is with the brokers.
Also, a lot of binary options often depend on the trading robots to automate their respective trades. So, try new strategies to avoid the risk of scams and play safe.
Though the Binary option is full of risk factors, we should see its pros too.
Here is a list of advantages we can get through trading in Binary Options-
- Trade control- As you enter this binary trading world, you must know what you make and lose. Thus, you have wiser and greater control from the start.
- Profit Potential- The most key factor in this type of trading is the returns in this field are pretty attractive. Also, as mentioned above, some brokers give 90% of the payout in a single trade.
- Choice- Compared to other trading platforms here, you have the choice and opportunity to trade across virtually, rather than being constrained to a particular market like stocks, bonds, cryptos.
- Fixed risk- There is undoubtedly a risk in this platform, but this risk factor is constrained to a minimum and only with few restrictions.
Is Trading Binary Options Legal?
Despite a bit of a negative reputation, Binary trading options are legal in some countries. And many companies and corporations operate this sufficiently. But many countries have outlawed this Binary Options Trading stating that this is not less than gambling and carries many risks.
The legal status of Binary trading in India is quite unpredictable as RBI and SEBI do not control Binary options in India. So, in short, whether the Binary Options are precisely legal or not? It is officially not legal.
Though there is no denying that people do get rich analytically, the game of this tool has been rigged right from starting with timeframe and payout to the possibilities of its profitable outcome and scams.
The profit and loss all depend on the underlying price on the right flank of the strike price.
Binary options are an excellent source of income for many traders, but the only two main points where traders hesitate or step back to invest money are its high-risk factor and legality.
Some tactics, or we can call fraudulent techniques employed by some binary brokers, made it impossible to get rich in this field.
But as stated, if you are lucky enough or that one of a thousand, you can go for this and have enough interest to give it a try.
And also, if you are completely new to Binary Option first, you should open a demo account to try this platform.