4 Characteristics of Binary Options

You would be familiar with financial markets like FX, Stock and other markets but it is quite possible that you are not familiar with the newest form of trading, known as binary options trading. This form of trading has increased in the recent years. It has its pros and cons like any other market but it offers more profits than losses. Given below are 4 characteristics of binary options that differentiate it from the other markets.

Unique Trading – When the retail trader is trading on this arena, he has a very unique option for trading because the result is either profit or loss of investment. This is also why it is called “Binary”.

Short Expiry Time – Unlike its colleagues, when you are trading with binary options, you have a very short expiry time. In fact, it can be as less as 15 minutes and go up to 1 hour. 15 minutes, half an hour and one hour are the most common expiry periods that traders use. This means that you have a very short time to earn a profit from any trend.

Loss Cannot Exceed Original Investment – A very unique characteristic of this trading option is that as a trader, your losses cannot exceed your original investment. Therefore, if your prediction regarding the trend was correct, then you can earn a profit that can be up to 72% of your original investment. And, if your prediction is wrong, then you lose your original investment completely. There is, however, a possibility that you will be able to keep a small percentage. This depends upon the policy of your broker.

No Trading Of Instrument – This is a characteristic that binary options shares with the Forex market. There is no actual trading of any instrument or goods. The trading is Over-The-Counter and is usually embedded in a particular option contract.

Binary options are also known as Digital Options, Fixed Return Options and All or Nothing Options. The rule allowing trading in binary options was approved in 2008 and since then it has been very popular. The reason for its popularity is that you can earn profits quickly and easily.

Although it is not necessary for you to have an extensive knowledge of the other financial markets, since you will be trading in instruments from them, knowledge of these markets will be helpful to you. Like the other markets, here also, you can seek assistance from a binary option broker to help you with the trading.

Vijayraj Reddy
Vijayraj Reddy is founder & editor-in-chief of Startmysalary.com, a financial blog which helps people to earn money, invest money and save money. You can find him on Facebook & Twitter or send him email at [email protected]

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