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Things you should know about binary options

The binary options industry has expanded in the past few and has become a common way of leveraging ones financial income. Increased popularity together with uncertainty about what binary options really are, have brought us to write the perfect guide explaining the very basics of binary options trading.

History – binary option are a direct development of what was known in the mid-20th century as Over The Counter options, OTC options had a similar nature to binary options and were physically traded over the counter. When binary options first came out in 2008, it was the first time trading was offered on web based trading platform. This meant that as oppose to other online trading platforms binary options inventors have developed a platform which is based solely based on the internet and does not require any software downloading. This meant a whole new trading experience as trader were no longer limited to trading from one device, their trading account would follow them were ever they go.

What are binary options? – once we have some background it’s time to further explain what binaries are all about; when buying a binary option traders are in fact buying a virtual option rather than a physical asset, this option allows traders to predict whether the price of an actual financial asset will rise or fall within a limited time frame. If a trader’s prediction is correct the he will have ended in the money and made a huge profit, if a prediction fails then the trade is lost and the trader will have lost his entire initial investment. Binaries can be traded on almost any existing world-wide finical asset such as; Stock, Indices, Commodities and Currency pairs.

Win or Lose – ending in the money means a trader’s prediction is correct and will generate an average profit of 81% on classic binary options, however there are other types of options which generate high yield profits which reach up to 600%, these options are usually traded by experienced traders which already know how to secure their trades. Ending out-of-the-money means a traded prediction failed and would normally cause him losing his entire initial investment which can be as low as $5 and up to $10,000, however advanced brokers do tend to offer a 10-15% payback insurance for a failed transaction.

Legality – binary options were first seen in 2008 and were traded under no regulatory authority for many years leaving the question of whether binary options are legal or not to the eyes of the trader. This went on for several years until 2012. In 2012 Major European regulatory bodied had decided too many people were using binary options and it’s time to protect them. After months of hard work EU regulators had come up with legal conditions binary options brokers should comply with in order to receive their legal certificate as international investment firms. Since 2013 most of the brokers who work within the EU have applied for an EU license, while brokers working with the US have purposely kept their unregulated status.

High risk – to conclude our most important things you should know about binary options we shall clarify the following; binary options involves high risks and doesn’t suit all traders. Binary trading is mainly recommended as an additional form of trading which will help diverse your investment portfolio. Always trade smart and prepare your future trading in advance, try to eliminate your trading emotions and base your trades on a well-planned trading strategy.