The digital binary option contract is a fast trading product which you can use to profit from short term moves on financial markets without the need to actually purchase the underlying asset. Rather than actually invest directly in the asset, you are in fact merely speculating as to where you think that its price will move over the duration of the specified contract. Contracts typically run for only a short periods of time which are often less than one hour. This gives the investor the opportunity to dip in and out of the markets to earn a profit as his analysis discovers potential opportunities to take.
Financial trading is a new way of investment and has grown in popularity as an ever greater number of people have realised the potential benefits. It is also fast paced and marks a distinct departure from the buy and hold strategies which were once the only available means that someone wanting to appreciate their capital had access to. Using this ‘trading’ approach you can see high returns coming into your account over the course of just a few hours.
As you are only ever exposed to the market for short periods of time you also help to reduce your risks. There is little fear of predicting a rise in the valuation of an asset only to see it reverse an hour or so later. By this time your contract will have ended and the return on your investment will have been booked. You can then sit out of the market until you identify the next move from which you can earn a profit.
The profitability of each contract placed when trading with binary options will vary. The duration that you stay in the market and the conditions attached for you to receive the payout are normally reflected in the amount that a broker will offer you. For a typical hourly contract you can expect to earn up to 90% of your original investment. This is paid out if the market has performed in line with your prior analysis. The pay-out level is fixed as soon as you enter the deal so you know precisely how much you stand to win at the outset.
Of course whenever the financial markets are brought into the equation there are potential risks attached. No matter which investment path you follow there will always be risks involved. However the benefit of trading with binary contracts is that what you need to risk in order to make your gain is known upfront. Therefore in addition to knowing your potential return you also are aware of any liability that you will face. If your contract expires ‘out of the money’ then you won’t receive the fixed payout and your contract will expire with no worth.
Traders like to know where they stand and in particular those who are getting started with trading for the first time see the transparency of this product as beneficial to them. It makes it much easier to manage the level of risk taken on their accounts. Furthermore there are no requirements to stake with high value amounts as contracts can be placed from just a few dollars. This opens up the trading potential of the markets to a wide variety of different individuals who want to try their hand at financial trading. For this reason using binary options as an investment vehicle can be one of the most successful routes to take if you want to make both a fast and high return on your investment capital.
This guest post contribution is provided by Phil Moore of Binaryoptionsprofits.net. You can find out more information on how to profit from this new way of trading by visiting http://www.binaryoptionsprofits.net.