To keep things simple, binary options are a revolutionary new way to day trade. Now, you may be familiar with some companies such as GOOGLE or APPLE and know that these companies have shares which are traded daily on the stock market.
Now, previously if you wanted to day trade these types of stocks you would need to have at least $25,000 in your account to be able to do so. Also it often took anywhere from a few days to even months for traders to generate any significant profits.
We also would not want to exclude the fact that depending on how your account is setup you never know how much money you could lose. What I mean by this is a stock could plumet, or if you are trading the Foreign exchange markets with leverage meaning you are playing with money you don’t have, you could end up with what is known as a “margin call” where you owe more money than you had initially invested which can get you into big trouble!
So clearly for some traders, opening an account with $25,000 and having to sit and wait for long periods of time to potentially generate profits as well not knowing how much they could lose, seems well… not so great.
This is what sets binary options apart, you don’t need a tremendous amount of starting capital to begin trading. You can begin trading with as little as $200 at some brokers and you are able to earn returns, or profits up to 91% of the amount you invest if you win your trade. So for example if I invested $100 in a Google stock bianry option with a payout of 72%, I could expect to earn a profit of $72 if the trade wins.
If your trade loses, you lose your entire invested amount unless a broker is offering what is known as an “out of the money” payout. Meaning if your trade loses you still gain back some of your initial investment.
With binary options you also know exactly when you can expect to know if a trade wins or loses by what is known as the expiry time. The expiry time is simply, when the option or trade expires. This can be as little as 60 seconds, 15 minutes or even the end of the month on some brokers.
And finally, with binary options you know exactly how much you could potentially lose. So because you set your own investment amount, and you cannot lose more than what you choose to invest.