Are Binary Options an Investment or Not?

The craze of trading has been going on for the last decade. The popularity of Bitcoin, other cryptocurrencies, commodities, indexes, crude oil, and stocks are at their peak. If you know more or less about these trades, almost each of these has the same investment concept.

Binary options trading is another part of the list. Traders are earning high values with this easy trick of making money. However, binary options trading doesn’t involve standard investment techniques. Everyone in this trade follows a different definition of investment. So the question arises, Is Binary Options An Investment?

If you want to know the answer, have a look at the article. Then, you’ll have a clear concept of binary options trading.

What Makes Binary Options Trading Unique from Others?

Binary Options are not related to direct investment. Lending money on some product or company and waiting for the rise or fall of the price is the most straightforward investment concept. However, the mode of money lending is making all the difference.

For Binary Options Trading, you need to buy a financial product first. A financial product is called an asset. The investment will be one time for this trading. By investing an amount of money, you have to buy an asset to do the trading.

The central theme of binary trading stands upon this decision, whether the price will go up or down to a specific limit within a period. YES or NO is the only thing that keeps you away from your money. 

It is the basic concept of binary options trading. That means the investment is permanent, but the mode of investment is different.

How is Binary Options Trading Done on Investment?

Through this point, you’ll have a clear idea of how an investment works in binary trading. However, if you are interested to know the working procedure too, it will help. Let’s see.

#1 Know The Strike Price

Your concern will be the strike price. You already know that you have to buy assets by investing money. After that, you have to pull an assumption based on records, where the price of your assets will go after a specific time. 

Two things will happen here. One, you will get the option, select the price limit for the given time. Second, you’ll have two options like YES and NO to choose the given price range. This price range on the given time (Expiry Date) is known as Strike Price. It will decide the future of your assets.

#2 Trading Results

As you have selected yes or no according to your strategies, now it’s time for the results. When the specific period is over, the automated service of binary options will add or deduct money from your account. 

The gain or loss will be calculated onwards. If you are using an advanced tool, you can keep checking the values before the results. If the prediction is correct and the price is underlying the strike price, you’ll get a good amount; otherwise, 70% will be deducted from your assets’ values. 

As we discuss the process, let’s see it with an example for better understanding.

Suppose there is a binary trade of price $70. It is the strike price, and it will expire, next day at noon. Again, suppose a trader has bought the stock or asset with $40. Now, what will happen with his stock or assets? Is it entirely on the market?

  • He has to select the yes or no accordingly. Even if he wants to choose the price rise or fall, he can have the options.
  • After the given time, if the price gets higher than $100, he wins the trading. He will get an additional $30 ( $100-$70). 
  • Again, if the price falls below the strike price, he’ll lose $30. It will create a problem while selling the stocks.

Generally, American Binary trading is known as Nadex. The above discussion is based on Nadex because only there the profit loss combined value is $100. Other than US Binary options, the price may exceed up to $120 and $180.

What Must You Know Regarding Investment Before Binary Options Trading?

  • Binary Options Trading is following completely different guidelines for US-based countries and European Countries. If you are trying to trade in the US, Nadex has some different guidelines, among which the Vanilla option is attractive.
  • A vanilla option is nothing but binary trading except one law. Here, you don’t have to wait for the specific time range to keep your assets worth your predicted price. That means there is no time range for vanilla trading. However, in Europe and other countries, the traditional law of binary options will go on.
  • Winning money on binary options depends on the strike price. However, some assets never touched the strike price. For those cases, though you have predicted correctly, you won’t get the expected amount. Instead, a charge will be deducted from there.
  • Lastly, always go with the Security and Exchange Commission. It is also known as SEC. Other than US countries, everyone follows the laws and regulations of the SEC. Those are standards. So, if someone promises you to give high profit by neglecting the standards, you must avoid it. There is a high amount of fraud through this.

All these terms and rules you must know regarding investment before Binary Options.

Conclusion

Binary Options Trading is becoming traders’ favorite due to its easy tricks. Unlike other trading options, it is simple and highly profitable. Even you can keep your earnings with a one-time investment. 

So, are you also interested in it? Then start binary options trading today. You must be well aware of the special hours of respective countries to target the high profits. Use Advanced Tools, hire Brokerage firms and make a strong plan. 

As soon as you can make these up, start trading on the binary options. Keep your eyes on the market’s movements and predict according to the strike price and expiry date.

About the author

I am an experienced Binary Options trader for more than 10 years. Mainly, I trade 60 second-trades at a very high hit rate.

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