Binary options are a bit like Newton’s third law of motion. The concept is the same: every action has an equal and opposite reaction. The theorem sounds easy to the ears; but between the ears, it gets tough.
The same is the case with binary options. It looks an easy way to gain money. All you need to do is to predict how a stock or commodity is going to behave at a particular time frame and back your prediction with a deposit. You get almost double the amount you invest. That is, when the prediction is right. If it is not, you can say goodbye to your deposit.
The fact is that you have almost equal chances of winning and losing. In other words, you can have one of the two equal and opposite results: either you gain money or you lose money. There is no in-between thing.
What is it really, other than the old Physics stuff?
The jury is still out regarding the exact nature of binary options. You can call it an investment. Or you can call it a form of betting, or gambling. For convenience’s sake, we can term it a marriage between investment and gambling. It is an investment in physical appearance, but gambling at heart.
You know what a binary is, don’t you? 0 and 1, for example. The word is derived from Latin, where “binaries” means “consisting of two”. In binary options, you put your money for a particular eventuality on financial markets – especially stock market, bullion market or Forex – at a certain point of time. If that eventuality realises, you get almost double the investment amount back. If it does not happen, you lose almost the entire amount.
For example, you wager 100 Euros on the eventuality that the price of a gram of gold exceeding 40 Euros at the closure of a day’s market, say at 6 pm. If the gold price goes higher than 40 Euros per gram at 6 PM, you will get back about 180 Euros. If it does not, you get only 15 Euros. If the gold price stays at 40 Euros, you will get back your 100 Euros. It is kind of a winter-takes-all investment. If you win, you will be richer; if you lose, you will be poorer.
Unlike the other forms of investments, you don’t really own anything – like stocks or deposits. In that sense, it is like betting. You are wagering on a particular result. But unlike betting, there are no odds or bookmakers.
Who invented binary options?
Well, the story goes like this. Some modern-day Isaac Newton in the financial world was sleeping by resting his head on the keyboard during a lunch break. The stock price of Apple fell on his head. He woke up startled, and a sudden thought flashed on his brain. How can I make money on the fluctuations of stock and asset markets? And thus, folks, the concept of binary options was born!
Jokes aside, there is no finite proof of its origin. It has been becoming increasingly popular during the last decade or so. It first gained traction on the US financial scene and gradually spread to Europe and beyond. At present, it attracts a considerable number of people and funds from across the globe. The financial firms that offer binary options have proliferated on the Internet.
Is it really a good business?
It is a fair investment, in the sense that there are no hidden dangers. The danger is clear and well publicised. If your prediction is not correct, you will lose a substantial amount of money. The risk is high; the reward too is high. It is up to the individuals to figure out whether binary options are their kind of thing or not.
The binary options business is largely unregulated. Cyprus is the only European country that has provided license for a binary options broker. Malta may join the list soon. You get what that means, right? A majority of the binary options brokers you see on the internet are neither licensed nor regulated.
It has been a business built on mutual trust between brokers and clients. It is literally a billion dollar business these days, attracting an increasing number of transactions and clients every day.
One of the outstanding binary options provider is Banc de Binary.
Banc De Binary has become the home of the 21st century investor. The company was founded in 2008 during the wake of the financial crisis, and has set out to provide the simplest and most profitable trading solutions for their customers.
Today, via their online binary options platform, Banc De Binary provides access to the financial markets for +250,000 account holders in over 80 countries worldwide. It has become an industry leader and is a multi award-winning firm, this is why they are pleased to guarantee a safe and risk-controlled environment for all of their valued clients.
BE SURE TO CHECK THEIR OUTSTANDING OFFER HERE.
How to begin
You need to get an account with a broker. There are many on the internet. Submit basic personal details, provide an ID proof and transfer an amount from a credit card – that is all, you have an account ready. The brokers offer wagers on a wide range of eventualities in stock markets, asset markets and foreign exchange.
Basically, there are three kinds of binary options:
Short term: the eventuality on which you place your money happens on that day itself, within minutes or hours. You do not have to wait for long to understand whether you lose money or gain money. The financial markets fluctuate wildly for no apparent reason within a short time span. Beginners are advised to tread with caution on short-term binary options.
Medium term: The eventuality happens within hours or days. Maximum, you will have to wait for a couple of days to find out the fate of your money.
Long term: The deadline extends to days or weeks. You will not find too many options in the current scenario that go beyond a week’s time.
Terms and conditions
The terms and conditions vary from broker to broker. Some brokers allow you to take a profit of 90% of your deposit amount if you win, but they do not give back anything if you lose. Some others allow you to take 80% of the amount, but they take 90% if you lose.
Have you spotted a difference of 5-10% between the amount you take if you win and the amount they take if you lose? Well, that is just to keep the winning odds on their side. On a long run, if you want to become profitable through binary options, you will have to win more than 55% of the options. If it is 50-50, you will suffer losses.
Binary options in East Europe
Eastern Europeans, who are historically conditioned to political binary options of monarchy and communism, are slowly getting accustomed to the new age financial tools. Many binary options brokers accept deposits from Eastern European countries. Some of them are based at East Europe too. Both the number of brokers and the number of customers have been on the rise in these parts.
Is it really a good opportunity for Eastern European investors?
Well, it is a good one if you play it safe. There is no way you can win on all occasions. The trick is to minimise the losses. If you have a decent awareness of the financial market scene, start putting money on long-term binary options at the beginning, and follow your brain rather than heart, there is a good chance that you make profit from this investment.
Good luck. But do remember Newton’s third law of motion while putting money on binary options: every action has an equal and opposite reaction.
