If you want to earn a good return on your investment within a short time span just by predicting the price movement of an asset that you are trading, you are perhaps aiming at binary option trading (BO). In this trading option, all you have to do is choose an asset of your choice and anticipate the movement of the price (whether or not it will fall or rise) within a short time span referred to as the expiration date.
If your prediction is correct you are the winner, otherwise you lose your investment, most of it, if not the entire amount. There are certain binary option brokers that will assure to return to you a little amount if you have lost the trade. However, the amount you get back from the brokers or the trading platform will depend and differ from one broker to another.
BO has an almost gambling risk because the prediction time is too short.
Binary trading strategies and essential features
When you trade binary options, there are few essential aspects that you need to take into account. These include the initial deposit, the different types of assets you can trade on, whether or not you are a citizen of USA (as there are regulations and not all brokers will be available for trading), the payouts from the brokers, the minimum amount with which you can trade and the like.
Also there are different binary option trading strategies that are employed. There are trade indicators and signals that will help you to make the price movement predictions in a more appropriate manner and so on. With the help of technical and analytical charts, the predictions can be made correctly and in this regard the broker plays a significant role in assisting you.
Pros and cons of trading binary options
As far as the positives are concerned, if your predictions are right, you get to earn a good amount within a very short period of time. With as little as USD$100 you can start trading (depending on the broker you are opting for. However, you will have to choose such a broker that offers trading with minimum USD$100), and even if you lose you know you have not lost it all. The risk is minimized as the trading amount can be low. There are a number of assets you can trade with. And last but not the least, in binary option trading, you either lose or win. There’s no middle path in results.
Since you are able to make high profits within a very short time span, there are many traders that get lured and tend to spend more on the trade. And if the prediction is not right, they lose a bulk of the investment they make. Not all brokers are genuine and if you happen to fall prey to one such scammer, you lose all your investment.
Moreover, the fact that there are innumerable brokers in the market, it become difficult to choose the one that will help you to sail through the entire trading process without ripping you off or taking you for a ride.
After all, BO is very risky, much higher than trading on the stock exchange or crypto.