Higher returns, lower risk, and shorter investment period. This is a tremendous advantage in http://www.dwhm.org/forex/barbados.html discussed by new investors and experienced about binary options trading. Although it is relatively new compared to other trading methods and investment tools, it has gained strong followers. Here, we provide some basics about this investment tool and what is offered to investors.
Binary Option Basics
Before taking advantage of other derivatives, it is important to first see exactly how this trade works. Like all other options, binary option values ??are based on basic assets such as stocks or foreign exchange. This is related to the performance of the underlying asset, and any profit or loss in this trade will depend on whether the underlying asset value rises or falls.
But unlike other financial investment tools, in this type of trade, your profit or loss has been predetermined and pegged to two specific amounts. In all-or-nothing binary options, for example, you get a predetermined gain, or you get nothing. If the underlying asset is a stock, even the slightest increase in the value of shares at the maturity date will make investors get a predetermined profit. A decline in the value of the underlying stock on the due date, on the other hand, will be translated into a total loss or pre-determined loss, depending on the terms of the option. With this investment tool, there is no middle ground, only two possible results, hence the so-called “binary” option.
So why do they say that this trade has a lower risk than other traditional trading methods? The answer lies in two factors: shorter maturity period and predetermined profit / loss. From the start, an investor knows exactly how much he can lose or get from his investment, so there is less speculation and less risk. There is no chance of losing more than you expected, because the possibility of losses is set at a predetermined amount, so investors can choose the right option that is most comfortable for them. So you don’t have to worry about market shocks and upheaval which sometimes causes loss of control.