Investing

Should You Include Binary Options In Your Investment Strategy?

Cleverdude_vacationbudgetpicEveryone’s investment strategy is different. Whether they are investing for the short or the long term, their goal is to make money. Several investment strategies are out there such as active versus passive, buy and hold and value versus growth.

Another controversial strategy out there for investors is called binary options. Banc De Binary’s binary options are limited risk contracts based entirely on a yes/no proposition. Binary options ask a simple yes or no question similar to the one below.

Will the price of silver be above $1600 at 12 pm?

If you believe that the answer is yes, then you would buy the binary option. If you think the answer is no, you will sell.

The two main types of binary options are the cash or nothing option and the asset or nothing option. With a cash or nothing option, the holder is paid a fixed amount of money if the option is in the money upon expiration. The asset or nothing option pays the value of the underlying security.

There are several pros and cons when it comes to investing in binary options.

You know your risk

You know what you are risking at the beginning. You also know how much you will profit as well. You can never lose more than your original investment.

Easy to trade

Binary options’ trading is very easy to understand. It doesn’t involve any complicated math formulas. Websites are very user friendly for people that are interested in learning about binary options. Many of them have videos and other features that help you understand them quickly.

Different trading features

Binary options have several different trading functions. They have high/low options, range options, quick options and one touch options.

High return on investment

Binary options have a higher return on investment. According to Intelligent HQ, you can receive rates at 70% or above.

Fast returns

Most investments can take years before you see any profit. Binary options have quick payouts. Many pay out in less than an hour. Some even pay out in 60 seconds.

The pros sound good, but there are some cons as well.

Poor regulation

In the past, some brokers have been accused of scamming investors. Many brokers are also not regulated or set up in foreign countries. This may make it tough to find a trustworthy broker.

High risk

You have the opportunity to receive a high payout with binary options. A lot of people invest large amounts of money trying to get that payout. They fail to remember that if they lose that money, it’s gone forever. Binary options are not like stocks where you can sell them if the investment isn’t good.

Easy to trade

This was also listed on my pro list earlier. The fact that binary options are easy to learn could allow a new trader to overestimate his or her ability. They could think they know everything and then lose a lot of money very quickly.

Binary options are fascinating. As stated earlier, they are a high risk investing option. If you decide to go include them in your investment strategy, make sure that you research and find a reputable broker.

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James

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